LIBRARY 

OF  TH1. 

UNIVERSITY  OF  CALIFORNIA 


Accession         .9.6.0.9.5.....       Class 


RAILWAY  POOLS 

Their  Equity  and  Public  Value, 


BY 


GEO.    R.   BLANCHARD. 


"Regulation  is  as  essential  to  railways  as  to  the  public. 
In  depriving  the  roads  of  the  power  to  hurt  each  other  they 
will  be  divested  of  the  power  to  injure  the  public. 
The  roads  endeavor  to  do  by  voluntary  action  what  the 
( lovernnient  has  failed  to  do  for  them,  and  ninety  per  cent, 
of  their  efforts  is  wasted  because  the  Government  with- 
holds its  sanction." — Interstate  Commissioner  Schoon- 
maker,  1891. 


**(  'ombinations  that  do  not  restrain  and  monopolies 
whose  constant  tendency,  during  the  long  series  of  years, 
has  been  to  bring  producers  and  consumers  into  closer  rela- 
tions with  each  other  and  lessen  the  cost  of  living  to  both, 
deserve  praise  and  support  rather  than  censure  and  adverse 
legislation." — HON.  SIDNEY  DILLON,  then  president  Union 
Pacific  Company,  North  American  Review,  April,  1891. 


NEW   YORK,    IV1AY,    1897 


RAILWAY  POOLS 

Their  Equity  and  Public  Value, 


BY 


QEO.    R.    BLANCHARD. 


"Regulation  is  as  essential  to  railways  as  to  the  public. 
In  depriving  the  roads  of  the  power  to  hurt  each  other  they 
will  be  divested  of  the  power  to  injure  the  public. 
The  roads  endeavor  to  do  by  voluntary  action  what  the 
Government  has  failed  to  do  for  them,  and  ninety  per  cent, 
of  their  efforts  is  wasted  because  the  Government  with- 
holds its  sanction." — Interstate  Commissioner  Schoon- 
maker,  1891. 


"Combinations  that  do  not  restrain  and  monopolies 
whose  constant  tendency,  during  the  long  series  of  years, 
has  been  to  bring  producers  and  consumers  into  closer  rela- 
tions with  each  other  and  lessen  the  cost  of  living  to  both, 
deserve  praise  and  support  rather  than  censure  and  adverse 
legislation." — HON.  SIDNEY  DILLON,  then  president  Union 
Pacific  Company,  North  American  Review,  April,  1891. 


NEIW   YORK,    MAY, 


\T\BRA? 

OF  THE 

UNIVERSITY 


n  n 


ARTICLE  I. 

Governmental  and  Railway  Tariffs. 

ARTICLE  II. 

Competitions  Compared. 

ARTICLE  ffl. 
The  Interstate  Commerce  Act. 

ARTICLE  IV. 
What  Railway  Pooling  Is. 

ARTICLE  V. 
Railway  Claims  to  Legislative  Relief. 

ARTICLE  VI. 

Indorsements  of  Pooling. 

ARTICLE  VE. 
Foreign  Railway  Rates  and  Pooling. 


ARTICLE   I. 

GOVERNMENTAL  AND    RAILWAY   TARIFFS. 

The  United  States  bonded  debt,  November  1,  1896, 
was  $847,364,460.  The  railway  bonds  were  $5,641,000,- 
000,  about  seven  times  greater.  Legitimate  and  so-called 
watered  railway  stocks  were  roundly  $5,000,000,000  more, 
at  par. 

The  annual  interest  on  the  national  debt  is  about  $29,- 
000,000,  and  about  $252,000,000  011  the  railway  bonds. 

President  McKinley  told  Congress  March  15,  1897, 
that  the  government's  gross  receipts  for  its  fiscal  years 
1894-5-6  were  $1,072,651,000,  and  that  they  were  $138,- 
000,000  less  than  its  expenses.  The  railway  receipts  in 
the  same  period  were  $3,408,200,000,  over  three  times  as 
much. 

The  Interstate  Commerce  Commission's  report  for  1895 
stated  that  $890,000,000  of  railway  bonds  were  in  default 
of  interest,  being  $43,000,000  more  than  the  outstanding 
national  bonds.  These  defaults  increased  in  1896.  If 
the  interest  payable  thereon  averaged  5  per  cent.,  and  it 
was  three  years  in  default,  such  defaults  would  aggregate 
$133,500,000,  or  about  the  same  as  the  government  de- 
ficits in  the  same  period.  During  the  same  three  years 
railway  dividends  decreased  $22,000,000  more. 

The  President  specially  convened  an  association  of  the 
States,  called  Congress,  to  tell  them  that  business  confi- 
dence and  tho  public  credit  required  increase^  import  tar- 


G 

iffs  to  extend  trade.     The  House  concurred  in  his  opinion 
by  84  majority. 

Almost  simultaneously  the  Supreme  Court  declared,  by 
one  majority,  that  an  association  of  railways  which  hud 
reduced  transportation  tariffs,  should  not  agree  even  to 
that  end  or  to  aid  their  credits,  or  to  secure  the  uniformity 
of  charges  which  the  government  maintains  in  its  import, 
postage,  internal  tax,  land  and  consular  tariffs,  and  which 
is  required  in  the  collection  of  all  national,  State  and  mu- 
nicipal taxes,  upon  the  ground  that  such  acts  would  re- 
strain trade. 

EFFECT  OF  THE  DECISION. 

Should  this  decision  cause  further  serious  depletions  of 
railway  earnings,  interest  and  dividends,  it  would  involve 
greater  actual  loss  than  to  pass  the  interest  on  government 
bonds,  and  as  much,  or  more,  impair  the  national  credit, 
because  prosperity  cannot  return  to  the  nation  while  in- 
creased disasters  assail  its  largest  material  and  financial 
interest.  The  reductions  of  American  railway  values  in 
the  markets  of  the  world  prove  this,  despite  a  reassuring 
national  election.  The  prevention  or  correction  of  that 
railway  condition  lies  as  fully  within  the  power  and  duty 
of  Congress  as  to  restore  general  business  confidence  by 
increased  import  rates,  and  when  rightly  understood  it  will 
secure  public  approval  because  the  railways  desire  legisla- 
tive aid  only  to  the  end  that  their  impartial  published  tar- 
iffs, which  are  the  lowest  of  the  world,  may  be  reliably  ob- 
served. 

If  the  Supreme  Court  opinion  was  soundly  based  upon 
the  laws,  those  laws  must  have  been  enacted  through  pub- 


7 

lie  misapprehensions  which  it  seems  essential  to  remove, 
and  such  amendments  of  law  should  be  made  instead  as 
will  secure  reasonable,  impartial,  public  and  stable  trans- 
portation charges  by  the  means  found  wise  and  necessary 
to  determine,  collect,  apportion  and  disburse  the  govern- 
mental incomes,  which,  being  smaller,  touch  fewer  people. 
The  government  pays  uniform  railway  compensation  in 
large  amounts  for  the  like  carriage  of  its  mails  and  stipu- 
lated prices  for  the  transportation  of  its  troops  and  sup- 
plies, yet  it  does  not  plead  that  "competition"  is  lessened, 
"trade  restrained,"  or  its  expenses  are  increased  because 
it  does  not  receive  concealed  rebates  from  those  charges. 
If  governmental  officers  accepted  them  they  would  be  dis- 
missed. Nor  do  those  officers  say  that  as  the  rates  they 
from  time  to  time  ask  for  are  for  the  government,  they 
will  exercise  its  power  to  compel  open  or  secret  cut  rates  or 
that  they  will  divert  their  large  business  if  railways  do  not 
concede  for  the  State  some  or  all  of  the  irregular  things 
done  privately  under  guises  called  "competition."  As  the 
government  is  the  largest  patron  of  the  railways,  its  legal 
aid  should  be  clearly  given  to  put  and  keep  all  other  pa- 
trons upon  the  same  honorable  plane  on  which  it  conducts 
its  own  business  with  the  same  carriers. 

GOVERNMENTAL  CONTROL. 

If  the  United  States  purchased  the  railways  the  govern- 
ment would  continue  to  so  act  as  to  its  own  traffic  and 
would  fix  and  enforce  against  all  others,  transportation 
charges  found  reasonable  and  made  public,  and  such 
charges  would  not  be  secretly  reduced.  Conferences 
among  parallel  governmental  lines  would  also  be  as  essen- 


tial  then  as  now,  to  decide  and  announce  their  intricate 
rates  and  the  changes  in  them  required  by  law,  by  new 
and  trade  conditions  and  by  those  great  legitimate  compet- 
itive forces  which  are  controlling  and  ceaseless. 

Railway  competition,  as  now  understood,  would  then 
cease  between  parallel  governmental  carriers  as  it  has  be- 
tween governmental  custom  houses,  and,  after  the  railway 
receipts  had  gone  into  one  national  purse,  they  would  be 
assigned  to  the  proper  departmental  revenues.  These 
analogies  represent  not  only  the  whole  scope  of  present 
railway  conferences  or  associations,  but  also  the  equality 
and  firmness  of  rates  intended  to  be  secured  by  pooling. 

The  legal,  unifying  and  police  powers  of  the  govern- 
ment would  then  promptly  remove  all  obstacles  to  uniform 
charges  over  its  lines,  as  in  its  postal  management  and 
rates,  whereas  the  impediments  which  confront  the  rail- 
ways are  vastly  greater,  and  increase  instead  of  diminish, 
because  due  power  to  regulate  them  is  not  only  being  with- 
held but  lessened.  New  railway  lines,  consolidations  and 
combinations,  carriers'  antagonisms,  man's  faults,  the  ri- 
valries of  States,  cities  and  districts,  the  constant  competi- 
tion of  water  routes  and  rival  foreign  countries  and  mar- 
kets, the  wrongful  depletions  of  reasonable  rates  by  weak 
carriers  and  strong  shippers,  and  the  struggles  and  repri- 
sals which  ensue,  compel  diverse  corporate  policies  and 
create  recurring  disturbances,  which  are  not  only  uncor- 
rected,  but  are  growing. 

The  pooling  plan  of  railway  co-operation  is  therefore 
needful  to  secure  the  best  public  and  railway  accord,  and  it 
is  but  the  counterpart  and  equivalent  of  what  government- 
al management  would  be,  yet  it  is  forbidden  by  law  and 


questionable  decisions,  and  a  situation  easily  made  better 
grows  nationally  worse. 

If  the  government  purchased  only  the  Union  Pacific 
Railway  under  the  pending  foreclosure,  it  could  only 
announce  its  rates  upon  the  large  competitive  traffic  of 
that  great  system  after  the  conferences  and  the  methods 
that  company  now  avails  of..  With  all  its  power,  the 
government  could  not  maintain  independent  rates  on  that 
one  line  and  secure  rival  traffic  for  it,  unless  its  private 
competitors  made  the  same  rates  and  maintained  them 
with  equal  honor  and  inflexibility,  nor  can  that  railway  do 
so  now.  This  has  been  found  true  of  the  competition  of 
government  railways  with  private  lines  in  Europe. 

If  the  transportation  confusion  caused  by  the  Trans- 
Missouri  decision  induced  the  present  Congress  to  appoint 
a  Governmental  Commission  to  consider  and  report  upon 
the  best  and  most  equitable  means  to  first  determine  rea- 
sonable rates,  to  change  them  as  controlling  circumstances 
might  require,  and  to  thereafter  cause  them  to  be  observed 
as  so  fixed. and  changed,  in  order  that  discriminations 
should  cease,  there  is  no  doubt  that  such  a  commission 
would,  in  all  essential  particulars,  recommend  adherence 
to  the  usage  of  the  present  traffic  associations,  which  rep- 
resent the  condensations  of  intelligent  experience  and 
fairness. 

THEORIZING  UPON  COMPETITION. 

Such  a  purchase  might,  therefore,  be  desirable  as  a  stop 
to  Congressional  theorizing  upon  competition,  by  bringing 
Senators,  Representatives  and  governmental  officers  to 
consider  the  alternative  which  all  competitive  railways 


10 


must  now  contemplate  throughout  the  country,  i.  e.,  to 
observe  the  Interstate  Commerce  Act  and  thereby  sur- 
render their  competitive  traffic  to  more  plastic  private 
rivals,  or  to  keep  their  shares  of  business  by  the  methods 
employed  by  the  latter.  They  would,  perhaps,  heed 
advice  then  which  is  so  far  ignored  and  doubted. 

When  the  government  publishes  import  tariffs  designed 
to  secure  revenues  adequate  to  its  needs,  or  to  induce 
private  capital  to  enlarge  national  trade,  it  assures  to  the 
world  their  impartial  and  unabated  collection.  Any  in- 
stability in  those  changes  greatly  disturbs  trade.  If  the 
railways  simultaneously  file  with  the  government  reason- 
able transportation  tariffs,  which  are  equally  or  more 
calculated  to  give  effect  to  the  same  national  policy,  and 
which  are  intended  to  be  stable,  upon  what  justifiable 
grounds  can  the  nation  deny  the  aid  of  legally  regulated 
contracts  and  pooling  to  collect  and  retain  their  due 
charges,  as  being  the  only  plans  which  have  anywhere 
proved  effective  stops  of  illegal  depletions  of  reasonable 
rates,  which,  however  small,  are  always  discriminations? 

That  one  is  a  governmental  and  the  other  a  corporate 
tariff  is  not  an  honest  or  just  reply,  and  no  government  but 
ours  so  illogically  answers  its  carriers.  While,  therefore, 
our  legislators  condemn  railway  discriminations,  they  more 
discriminate  by  withholding  from  railways  any  measure 
whatever  of  the  protection  they  give  rail  mills  and  others, 
yet,  whether  national  revenue,  credit,  labor  or  commerce 
be  considered,  the  railways  are  the  largest  factor  in  those 
public  purposes  and  results,  and  are  entitled  to  equal  or 
greater  consideration. 

For  illustration,  the  existing  import  tariff  may  be  justly 


11 

increased  on  some  articles  by  the  schedule  now  pending, 
but  if  the  railways  should  fractionally  advance  their  rates 
on  imported  articles  it  would  be  characterized  as  unjusti- 
fiable, monopolistic,  extortionate,  etc.,  although  both 
increases  might  be  proper,  especially  in  instances  in  whicli 
privately  reduced  transportation  rates  might  neutralize 
increased  import  rates. 

RAILWAY  AND  CUSTOMS  CHARGES. 

However  that  may  be,  if  the  government  controlled 
both  the  railway  and  customs  charges,  it  would  inflex- 
ibly and  uniformly  charge  and  retain  both  schedules  as 
published.  Any  other  governmental  course  would  pro- 
voke just  public  indignation.  It  is  an  equally  desirable 
and  just  consummation  when  the  railways  collect  one  of 
those  charges.  If,  on  the  other  hand,  it  is  better  that 
only  the  transportation  element  of  commerce  be  capricious, 
concealed  and  preferential,  because  that  condition  is  a 
desirable  requisite  of  so-called  "  competition,"  should  not 
rival  customs  collectors  also  make  different  import  charges 
at  competing  ports  of  entry,  and  why  should  not  the 
whisky  tax  be  lower  at  Peoria  than  in  North  Carolina? 
Why  should  not  postage-stamps  be  sold  cheaper  at  profita- 
ble offices  like  New  York,  to  large  daily  users  of  the  mails, 
than  to  infrequent  letter-writers  at  small  offices  conducted 
at  a  loss?  And  why  should  letter  postage  be  the  same 
from  New  York  to  both  Brooklyn  and  San  Francisco? 

Next,  it  is  widely  claimed  that  transportation  is  a 
governmental  function  delegated  in  part  to  corporations, 
but  remaining  subject  to  national  control.  Upon  that 
farther  ground  railway  companies  seem  entitled  to  those 


12 

reasonable  delegations  of  power  which  would  be  necessary 
to  enable  the  government  to  secure  the  observance  of  like 
charges  under  like  circumstances. 

While  we  thus  argue  that  governmental  and  private 
railway  policy  should  be  alike  national,  public,  impartial 
and  enforceable,  carriers  also  concede  that  corporate  as 
well  as  governmental  railway  management  should  be  sub- 
ject to  proper  national  supervision. 

If  the  government  now  owned  the  railways,  the  dis 
quieting  defaults  of  interest  on  their  bonds,  the  lessened 
returns  on  their  legitimate  shares,  the  constant  impair- 
ments of  their  gross  and  net  revenues,  especially  from 
false  "  competition/7  would  combine  to  the  detriment  of 
their  physical  condition  and  safety,  as  well  as  to  injure 
their  fiscal  obligations  everywhere,  and  those  disturbing 
conditions  would  then  doubtless  have  been  set  forth  by 
the  President  as  needing  national  corrective  action  as 
much  as  the  other  financial  urgencies  to  which  he  asked 
consideration.  If  such  railway  retrogression  nevertheless 
continued  under  governmental  management,  itwould  have 
been  finally  necessary  to  meet  it  by  direct  appropriations 
or  by  diverting  other  governmental  incomes  to  such  deii 
cits.  Either  of  those  courses  would  be  more  expensive1  t  <  > 
all  the  people  and  more  unjust  in  application  and  effect 
than  to  charge  and  maintain  adequate  rates  payable  by 
the  actual  users  of  the  railways. 

AN  UNJUST  PROPOSITION. 

Railway  owners  and  managers  are  confronted  with  the 
same  problems,  but  have  been  denied  adequate  powers  to 
meet  them.  Therefore,  they  ask  governmental  sanction  to 


13 

a  policy  itself  could  not  escape  from.  To  answer  that 
railway  proprietors  and  managers  must  take  care  of  them- 
selves, yet  not  permit  them  to  do  so  legally,  is  the  retort 
of  theory  or  hostility,  is  not  just,  and  is  not  applied  to 
any  other  great  national  interest. 

As  the  United  States  do  not  own  any  railways,  these 
premises  must  be  sustained  by  proofs  drawn  from  other 
nations. 

In  1874  Switzerland  invited  Austria-Hungary,  Belgium, 
Germany,  Italy  and  the  Netherlands  to  confer  touching 
competitive  international  railway  tariffs  in  order  that  like 
rates — bills  of  lading,  etc.,  might  prevail  thereon  via  their 
rival  routes  and  frontiers.  Further  conferences  in  1878, 
'81  and  '86,  in  which  private  companies  participated,  con- 
sidered the  competitions  of  the  Mediterranean  and  North 
Seas  and  the  Danube,  Rhine  and  other  rivers,  as  well  as 
those  of  their  own  railways,  resulting  in  an  agreement  at 
Berne,  in  October,  1890,  which  was  subsequently  ratified 
by  all  the  participating  nations  and  made  effective  Janu- 
ary 1,  1893.  Under  that  compact  undue  competition  was 
ended,  not  only  governmental,  but  private  rights  were  con- 
served, and  public,  stable  and  reasonable  charges  were  an- 
nounced upon  which  to  base  competitive  national  and  in- 
ternational traffic  interchanges.  Had  those  governments 
and  their  private  railways  acted  upon  the  erroneous  theo- 
ries of  competition  held  by  inexperienced  and  hostile  op- 
ponents of  American  railways,  they  would  not  have  thus 
associated  or  agreed,  but  would  have  fought  the  carrying 
struggle  to  a  finish.  Private  corporations  would  have 
been  crippled  by  their  own  governments  and  the  latter 
would  then  have  continued  their  strifes,  depleted  their 


14 

several  national  revenues  and  involved  their  treasury 
budgets.  The  railways  would  have  deteriorated  and  com- 
mercial instabilities  and  discriminations  in  rates  would 
have  continued  or  increased.  Can  there  be  any  question 
which  is  the  juster  and  wiser  public  policy? 

LEGISLATION  NECESSARY. 

The  faults  of  the  Interstate  Commerce  Act  and  the  ef- 
fects of  the  Supreme  Court  decision  should  be  less  deplored 
if  the  present  discussion  brings  as  wise  and  permanent  leg- 
islation as  that  concluded  at  Berne.  Otherwise,  their 
fruits  will  grow  more  grievous  to  fair  traders  and  carriers 
and  will  more  incite  and  less  regulate  the  evils  of  concealed 
discriminations,  which  no  laws  and  no  railway  unity  have 
ever  yet  corrected  in  any  country  except  by  pools. 

Interstate  Commissioner  Schoon  maker  said: 

"The. lack  of  affirmative  legal  authority  for  such  asso- 
ciations, the  bad  faith  often  exhibited  by  some  of  their 
members  and  the  inability  either  to  restrain  or  punish 
delinquency  have  operated  in  another  tendency — the 
tendency  toward  consolidation." 

Moreover,  should  pooling  be  authorized  by  law,  and  be 
thereafter  found  to  antagonize  the  public  interest,  prompt 
repeal  or  amendments  or  enlargements  of  the  powers  of 
the  Interstate  Commerce  Commission  would  protect  the 
people. 

The  argument  of  these  articles  is  not  that  legislation 
should  sanction  a  past  railway  policy  which  may  be  finally 
adjudged  in  conflict  with  law,  but  it  holds  that  Congress 
was  well  advised  in  1886  to  sanction  pooling;  that  its  pro- 
hibition in  the  Interstate  act  was  a  public  as  well  as  corpo- 


15 

rate  misfortune ;  that  the  Anti-Trust  law  was  not  intended 
to  prohibit  fair  agreements  not  designed  to  raise  prices  or 
create  monopolies,  and  that  it  was  not  intended  to  apply 
to  railroads.  Inasmuch,  however,  as  doubts  have  arisen 
upon  some  of  these  points,  it  is  now  due  to  every  interest 
involved  that  they  be  removed  by  affirmative  legislation. 
The  argument  also  represents  only  the  writer's  views. 

Much  of  the  legislative  indisposition  to  affirm  pools  is 
based  upon  widespread  misconceptions  of  railway  competi- 
tion, which  will  be  therefore  considered  next. 


16 


ARTICLE    II. 

COMPETITIONS    COMPARED. 

When  the  term  competition  is  applied  to  purchasing 
and  selling  transportation  as  it  is  to  buying  and  vending 
goods  it  is  a  misnomer,  because  historically  and  instinct- 
ively the  word  conveys  to  most  minds  thoughts  of  bargain- 
ing and  concession. 

Buyers  seek  better  terms  than  sellers  first  ask  by  invit- 
ing price  reductions,  easier  terms  of  payment,  etc.,  and 
sellers  whose  capital,  manufacturing  facilities,  control  of 
specialties,  rentals,  etc.,  differ,  may,  in  order  to  divert  buy- 
ers from  known  and  unknown  rivals,  sell  at  dissimilar 
prices  adapted  to  market  conditions,  the  proportions  of 
cash  or  notes  offered  in  payment,  their  experiences  with 
buyers'  responsibilities,  and  the  profits  upon  the  entire 
bills  sold.  All  this  is  proper,  but  it  would  not  be  proper 
for  the  same  buyers  or  sellers  to  barter  and  bargain  in  the 
same  ways  for  different  railway  rates,  nor  would  it  be 
proper  or  legal  for  rival  railways  to  concede  preferential 
rates  varied  to  accord  with  each  agent's  estimate  of  each 
merchant's  credit,  shipments,  etc.,  or  with  the  various  cap- 
italizations, dividends,  distances  or  facilities  of  each  line. 

Competing  vendors  in  market  stalls  or  on  wagons  openly 
cry  their  own  and  decry  rival  wares  and  misrepresent  each 
other's  goods  and  methods,  but  variable  rates,  fares,  bills 
of  lading  and  tickets,  founded  on  misrepresentations  and 
discriminations,  must  not  be  peddled  publicly  from  rail- 
way wagons  or  privately  in  railway  offices. 


17 

Yachtsmen  "compete"  for  prizes  with  presumable  hon- 
esty, but  a  crew  may  be  corrupted,  a  yacht  purposely 
fouled  or  its  spars  weakened,  when  it  is  not  "competition," 
because  the  contest  may  be  decided  by  fraud.  The  same 
principle  holds  true  in  athletic  games,  horse  races,  prize 
fights,  etc.  If  the  judges  in  competitive  exhibitions  of 
machinery  or  art  sell  their  awards,  it  is  not  ' 'competition" 
more  than  it  would  be  if  one  railway  procured  the  derail- 
ment of  its  rival's  trains  or  misrepresented  the  time  and 
facilities  of  its  own  or  other,  routes.  Prison  laborers  do 
not  fairly  compete  with  honest  toilers,  nor  would  railways 
be  justified,  because  of  labor  competition,  in  reducing  the 
compensations  of  their  enginemen  to  the  wages  paid  con- 
vict engineers. 

UNTRUE  COMPETITION. 

If  a  yacht  owner,  trade  or  art  exhibitor  or  athlete  vio- 
lates the  rules  of  his  guild  in  its  contests,  he  is  debarred 
from  further  competition  and  publicly  denounced,  but  if 
the  fair  rates  and  rules  governing  the  far  more  important 
public  functions  of  transportation  are  violated  by  a  railway 
which  aided  to  make  them,  that  railway  is  given  increased 
patronage  on  trade  exchanges  which  would  dismiss  their 
own  members  for  lesser  infractions  of  their  fair  charges 
and  rules.  This  is  not  competition,  but  a  reward  for  ille- 
gal preferences. 

It  is  not,  therefore,  true  competition  when  one  or  more 
railways  unequally  alter  proper  public  rates  or  rules,  to 
which  they  have  previously  assented,  and  which  other  and 
more  judiciously  managed  railways  seek  to  observe  in  fur- 
therance of  law  and  the  public  interest,  as  the  great  ma- 


18 

jority  of  railways  sincerely  desire  and  strive  to  do.  Itfor 
is  it  true  competition  when  strong  and  well-meaning  car- 
riers which  have  lost  their  business  to  lax  rivals  take  some 
legal  chances  to  regain  and  keep  it,  because  if  they  waited 
for  the  law's  inefficient  help  in  such  instances  all  their  rival 
business  would  be  lost,  perhaps  permanently. 

Again,  if  one  railway  company  offers  a  tariff  rate, 
another  reduces  it  unreasonably  and  other  carriers  offer 
further  rebates  therefor  in  varying  ways,  it  is  clear  that  if 
the  first  rate  was  reasonable  the  last  one  is  unreasonably 
low,  and  that  such  devices,  which  are  not  competition  in 
any  sense,  involve  loss  to  the  first  shipper  and  the  last  car- 
rier. Such  conditions  constitute  preference,  discrimina- 
tion, waste  and  bankruptcy,  and  mean  that  fair  rate 
standards  should  be  restored. 

Assume  again,  one  railway  sturdy  for  its  legal  rates 
pitted  against  another  pliant  with  concessions  from  the 
same  rates,  and  two  shippers  of  diverse  business  standards, 
and  that  the  yielding  railway  grants  the  persuasive  large 
shipper  unknown  rebates.  In  such  strife  both  railways 
may  be  ruined,  one  because  it  loses  its  business,  the  other 
because  it  loses  its  profit,  and  one  merchant  is  sure  to  be 
ruined,  but  the  receiver  of  rebates  will  survive  and  will 
control  his  kind  of  business  at  the  point  where  the  rebate 
is  granted.  This  is  not  competition  within  any  honorable 
meaning.  Nor,  even  if  it  be  modern  law,  is  it  sound  busi- 
ness sense  or  good  public  policy  to  say  that  to  rightfully 
and  rightly  place  both  of  said  railways  and  both  of  said 
merchants  on  equal  and  equitable  conditions  can  be  a  re- 
straint of  trade. 

When  one  of  those  two  merchants  fails,  he  retires  from 


19 

such  strife.  If  but  one  of  those  two  railways  fails  it  must 
continue  in  business,  and  the  thoughtless  say  it  is  then 
best  prepared  to  take  the  largest  competitive  traffic  at  the 
lowest  rates,  to  which  other  carriers  must  conform  or  lose 
their  traffic,  being  the  only  trade  in  which  a  bankrupt 
makes  values  for  solvent  rivals  and  the  only  business  which 
it  is  popularly  believed  may  -be  increased  upon  insolvent 
capital. 

In  no  sense  is  this  true  competition,  and  railway  reor- 
ganizations based  on  such  false  conditions  invite  renewed 
failure,  for  they  induce  just  reprisals  and  the  return  of  the 
business  they  thus  divert  from  others. 

ONE  SERIOUS  RESULT. 

Again,  if  all  railways  gave  but  one  shipper  one  cent  per 
one  hundred  pounds  advantage,  he  would  ultimately  con- 
trol the  cereal  markets  of  the  nation.  So  would  he  if  one 
railway  at  each  large  shipping  point  granted  him  that  pref- 
erence, while  all  other  railways  thereat  stood  firm  for  right 
rates  and  rules  for  him  and  others.  The  result  differs 
only  in  degree  if  the  same  advantage  be  given  by  one  or 
many  railways  to  five  shippers  at  the  same  or  different 
points  who  may  then  attack  each  other  until  the  survivors 
are  fewer.  This  is  not  competition,  but  assault 'and  un- 
endurable favoritism.  The  protection  of  right  always  re- 
quires the  restraint  of  wrong,  especially  in  transportation, 
wherein  both  protection  and  restraint  must  come  from 
railway  co-operation  which  is  now  interdicted,  or  from  law, 
which  has  so  far  denied  its  sanction  to  the  best  plan  for 
both. 

Further,  the  merchant  who  reduces  prices  affects  only 


20 

his  rivals  in  his  locality,  while  railways  which  reduce 
through  rates  are  legally  required  to  make  their  interstate 
charges,  say  from  Chicago  to  Boston,  the  maxima  between 
numberless  intermediate  places.  This  also  is  not  competi- 
tion, but  the  effect  of  the  Interstate  Act,  because  the  of- 
fending line  may  not  reach  points  on  other  lines  which  are 
nevertheless  affected  by  the  reduced  through  rates  made 
necessary  via  all  routes  by  the  injudicious  action  of  per- 
haps only  one  route. 

Finally,  on  this  point,  charges  thus  varied  are  illegal 
and  punishable  by  fine  and  imprisonment.  The  Interstate 
Commerce  Act  requires  that  the  actual  rates  shall  be  pub- 
lished and  charged  alike  to  all;  that  they  shall  be  not  re- 
duced without  three  days'  or  raised  except  upon  ten  days' 
public  notice,  and  that  such  rates  shall  not  be  "more 
or  less"  than  the  tariffs  filed,  thereby  stipulating  that  rail- 
way competition  shall  differ  from  trade  competition. 

The  minority  opinion  in  the  Trans-Missouri  case  presents 
this  condition  succinctly  and  clearly  as  follows: 

"  That  the  Interstate  commerce  rates,  all  of  which  are 
controlled  by  the  provisions  as  to  reasonableness,  were  noi 
intended  to  fluctuate  hourly  and  daily  as  competition 
might  ebb  and  flow,  results  from  the  fact  that  the  pub- 
lished rates  could  not  be  increased  or  reduced,  except  after 
a  specified  time.  It  follows  then  that  agreements  as  to 
reasonable  rates  and  against  their  secret  reduction  con- 
form exactly  to  the  terms  of  the  act." 

MERCHANTS  WOULD  CO-OPERATE. 

For  these  reasons,  as  well  as  for  the  convenience,  cer- 
tainty and  restfulness  of  trade,  all  merchants  not  seeking 
rebates  would,  for  example,  approve  a  rate  of  twenty  cents 
per  one  hundred  pounds  from  Chicago  to  New  York,  and 


21 

such  regulative  legislation  as  would  sustain  that  rate  un- 
deviatingly  until  as  publicly  altered,  rather  than  endorse 
legal  decisions  or  railway  practices  which  stimulate  a  con- 
cealed rate  of  fifteen  cents  for  large  shippers,  when 
the  published  tariff  is  twenty  cents.  They  well  know 
that  such  vicious  discriminations  resemble  trust  methods 
and  render  commercial  competition  impossible  except  be- 
tween controllers  of  vast  capital,  who  may  impoverish 
smaller  traders,  and,  controlling  warehouses  full  of  traffic, 
tender  it  in  trainloads  to  pliable  railways  or  those  which 
lack  business,  else  shift  their  large  tonnages  from  line  to 
line  or  unite  with  other  shippers  to  more  compel  preferen- 
tial rates  or  conditions.  It  is  regretable  to  say  that  they 
too  often  obtain  them.  By  such  means  some  shippers  be- 
come dealers  in  diverted  railway  earnings  as  much  as  or 
more  than  in  their  own  merchandise  and  thereby  grow 
the  stronger  to  exact  further  railway  concessions,  to  stipu- 
late purchase  prices  to  producers  and  sale  prices  to  con- 
sumers, and  perhaps  use  their  combined  rebates  and 
capital  to  further  control  values  on  trade  and  financial 
exchanges. 

The  real  purpose  of  the  Anti-Trust  law  is  thus  reversed. 
Not  being,  as  the  railways  contend,  meant  to  apply  to 
them,  it  is  thus  far  adjudged  that  it  does  ;  yet  being 
clearly  applicable  to  trusts,  the  latter  escape  its  effect  and 
grow  stronger  from  large  transactions  between  themselves 
and  those  carriers  who  grant  them  special  advantages. 
That  decision  more  encourages  them  to  this  course  and  re- 
strains trade  by  limiting  it  to  the  favorites  thus  created. 

Reasoning  from  these  conditions,  it  cannot  be  too  often 
or  strongly  argued  that  however  much  all  competitive  rail- 


22 

ways  but  one  may  observe  common  and  legal  rates,  the 
strongest  and  best  disposed  companies  must  succumb  to 
the  objectionable  conditions  forced  upon  them  by  the 
weakest  or  worst  competitor  physically  or  morally.  This 
also  reverses  commercial  and  trust  conditions  wherein  the 
stronger  always  control; 

ANOTHER  ILLUSTRATION. 

As  a  further  illustration,  the  government's  postal  busi- 
ness would  be  impaired  and  disorganized  if  railways,  ex- 
press companies  and  house  to  house  carriers  cut  the  postal 
rates  twenty  per  cent.,  yet  if  real  competition  is  the  legis- 
lative desire  and  intent,  why  should  they  be  restrained 
from  such  carriage  by  law  as  they  now  are  ? 

As  Commissioner  Schoonmaker  well  said  : 

"A  rate  made  by  one  line  on  a  particular  traffic  must  be 
the  rate  of  all  other  lines  to  share  in  the  business." 

He  also  said  : 

"And  this  pernicious  power  is  the  creation  of  law,  and 
is  protected  by  the  law  upon  the  antiquated  and  once 
respectable  theory,  but  now  fully  demonstrated  fallacy, 
that  unrestricted  competition  among  railroads  is  a  public 
benefit," 

All  such  rate-cutting  methods  simply  sell  transportation 
awards  to  the  lowest  and  not  the  highest  bidders,  and  are 
not  therefore  proper  competition  more  than  are  auction 
sales  of  pawned,  bankrupt  or  damaged  goods  legitimate 
business  rivalry.  It  is  the  control  or  extinction  of  true 
carrying  competition  and  the  destruction  of  all  its  legiti- 
mate rules,  functions,  agencies  and  honorable  standards. 

In  these  facts  and  illustrations  lie  answers  to  those 
who  say  the  railways  have  only  themselves  to  blame  for 


23 

the  unreasonable  reductions  of  rates  and  the  untoward  con- 
ditions of  which  they  now  complain. 

Based  on  these  unassailed  premises,  competition  properly 
means  that  when  various  persons  seek  a  coveted  consum- 
mation or  patronage  they  shall  be  governed  by  those  rules 
in  each  branch  of  endeavor  which  apply  equally  to  all 
honorable  contestants  therefor,  and  which  experiences 
have  proven  fair  and  essential  to  enable  the  best  man, 
horse,  yacht,  machine,  picture,  shipper  or  railroad  to  win 
under  equal  conditions. 

TRUE  RAILWAY  COMPETITION. 

Comprehensively,  justly  and  legally,  considered  and 
applied  only  to  railways,  competition  means  due  adjust- 
ments and  readjustments  of  rates  to  conform  equitably  to 
those  causes  which  properly  control  or  affect  them — such 
as  rivalries  with  oceans,  rivers,  lakes  and  canals,  competing 
markets  which  distribute,  consume  or  reship,  the  relations 
of  localities,  etc.  Economies  in  cheaper  rails,  coal,  etc., 
longer  and  more  numerous  trains,  lower  grades,  improved 
terminal  facilities,  better  station-houses,  more  and  safer 
tracks,  celerity  of  service,  etc.,  are  also  elements  of  legiti- 
mate emulation  calculated  to  transfer  and  increase  busi- 
ness and  which  effect  lower  rates  thereon.  This  true  com- 
petition will,  therefore,  never  cease  between  any  rival 
lines. 

When  all  these  justly  competitive  forces  have  been  duly 
expressed  in  reasonable  and  uniform  rates,  fares  and  rules, 
each  and  every  violation  of  them,  however  small,  es- 
pecially by  those  who  helped  to  make  or  who  indorsed 
them,  constitutes  a  discrimination,  is  dishonorable  com- 


24 

petition  and  should  not  longer  receive  even  negative  trade 
or  national  sanction. 

Various  Interstate  Commissioners  have  strongly  con- 
firmed these  views.  Judge  Cooley  said  : 

"  How  distinctly  it  is  seen  here  that  it  is  utterly  impos- 
sible to  judge  of  railroad  competition  and  its  effects,  its 
usefulness  and  its  mischiefs,  by  comparing  it  with  compe- 
tition as  we  encounter  it  in  other  lines  of  business." 

Hon.  Martin  A.  Knapp  said  : 

"  Deprived  of  special  and  exclusive  rates,  an  advantage 
far  mare  odious  and  powerful  than  exemptions  from  taxa- 
tion, those  trusts  are  shorn  of  their  strength  and  divested 
of  their  supremacy." 

Judge  Patterson,  who  introduced  the  pooling  bill  of 
1895,  said  : 

"  This  preferential  system  throughout  the  country  is 
gradually  destroying  the  small  and  enriching  the  large 
shippers." 

The  great  English  Commission  of  1882  said  : 

"  "While  committees  and  commissions  carefully  chosen 
have  for  the  past  thirty  years  clung  to  one  form  of  com- 
petition or  another,  it  has,  nevertheless,  become  more  and 
more  evident  that  competition  must  fail  to  do  for  the  rail- 
ways what  it  does  for  ordinary  trade." 

It  also  said  : 

"  Reliance  upon  competition  between  railways  to  regu- 
late rates  and  maintain  them  upon  a  fair  basis  and  to  pre- 
vent unjust  discriminations  will  have  to  be  abandoned  as  a 
failure." 

OTHER  ENDORSEMENTS. 

lions.  A.  G.  Thurman,  E.  B.  Washburn  and  T.  M. 
Cooley  said  in  their  joint  report  of  1882  : 

"  It  is  a  state  of  things  that,  like  a  war  between  nations, 
from  its  very  destructiveness  cannot  be  a  normal  condi- 
tion, but  must  speedily  terminate  in  peace  or  disaster." 


They  further  said  : 

"  The  mere  statement  of  these  results  is  sufficient  to 
show  that  this  is  not  what  in  other  business  is  known  and 
designated  as  competition." 

A  distinguished  United  States  Senator  said,  in  1887  : 

"  Competition  of  railroad  transportation  differs  from 
every  other  kind  of  competition  in  the  world. 
It  is  not  competition  in  trade.     The  railroad  buys  nothing 
of  the  producer ;  it  sells  nothing  to  the  customer ;  it  simply 
carries;  it  distributes." 

The  Chief  of  Statistics  of  the  United  States  said  : 

"  Success  waited  upon  intrigue  and  false  representa- 
tions. The  freight  agents  deceived  the  merchants  and 
the  merchants  deceived  the  freight  agents." 

Senator  Cullom's  committee  said  : 

"  If  competition  is  to  have  full  sway,  as  it  does  now, 
the  constant  changes  it  would  necessitate  would  render  it 
impossible  to  maintain  fixed  rates." 

It  further  said  : 

"  Competition  does  not  prevent  personal  discrimination, 
for  the  evil  is  most  conspicuous  when  and  where  competi- 
tion is  most  active." 

Judge,  afterward  Senator,  Howe  said  : 

"  Competition  (meaning  improper  competition)  lias 
done  more  to  monopolize  trade  or  secure  exclusive  advan- 
tages in  it  than  has  been  done  by  contract." 

The  Interstate  Commerce  Commission  said,  in  its  first 
annual  report  : 

"  Excessive  and  unreasonable  competition  is  a  public 
injury." 

Why  the  Interstate  Commerce  Act  has  largely  failed 
to  meet  and  correct  these  conditions  will  be  considered 
next. 


ARTICLE   III. 

THE    INTERSTATE    COMMERCE    ACT. 

The  conditions  which  led  to  the  Interstate  Act  were 
dealt  with  in  the  Windom  report  of  1878  and  the  Reagan 
Bill  of  1879,  and  were  reported  upon  fully  by  the  Culloni 
committee  in  1886,  which  held  the  railway  system  to 
eighteen  (18)  counts,  eleven  (11)  of  which  related  to  dis- 
criminations, the  others  to  undue  rates,  capitalization, 
management,  classification  and  engaging  in  extraneous 
business.  Time  has  non-suited  the  last  seven  (7)  com- 
plaints. 

That  report  anticipated  what  experience  has  fully  con- 
firmed, when  it  declared  : 

"  That  a  problem  of  such  magnitude,  importance  and 
intricacy  can  be  summarily  solved  by  any  master  stroke 
of  legislative  wisdom  is  beyond  the  bounds  of  reasonable 
belief.'7 

The  Interstate  Act  has,  nevertheless,  secured  more  pub- 
licity of  rates,  lessened  open  rate  wars,  equalized  long  and 
short  haul  rates ;  has  exercised  beneficial  warning  or  police 
powers,  silenced  much  unjust  clamor  against  railways,  has 
been  mutually  educational,  and  has  been  judiciously  ad- 
ministered, but  as  secret  discriminations  and  open  wars 
have  continued,  the  law  has  failed  in  its  chief  object. 

Hon.  T.  M.  Cooley  said,  when  Chairman  of  the  Inter- 
state Commission  : 

"  The  law  was  best  observed  at  the  outset,  but  in  a  few 
months  it  began  to  be  noticed  that  many  persons  in  rail- 


27 


road  service  were  giving  more  attention  to  contrivances 
for  evading  the  spirit  and  intent  of  the  law  than  they  were 
to  obeying  it. 

*  -x-  -x-  #  *  * 

"Any  misconduct  of  this  sort  on  the  part  of  one  road  is 
imitated  at  once.  In  the  end  the  account  of 

profits  and  losses  shows  gains  by  no  one.  It  is  all  loss, 
and  all  the  roads  share  it." 


CHARGE  PARTLY  TRUE. 

It  is  due  to  the  law,  to  its  administrators  and  to  frank 
discussion,  to  admit  much  of  this  charge  against  the  car- 
riers as  a  whole. 

Nevertheless,  this  relapse  proceeded  mainly  from  the 
national  refusal  to  confirm  the  only  plan  which  was  thus 
commended,  and  which,  less  than  a  year  before,  had  ena- 
bled strong  and  sincere  carriers,  and  others  less  strong  in 
purpose  or  facilities,  to  equally  observe  reasonable  and 
common  rates  between  leading  points,  by  giving  all  a 
joint  interest  and  power  to  resist  demoralization  by  agree- 
ing to  divisions  of  tonnage  or  money,  or  both.  The 
Interstate  Act  followed  foreign  precedents,  but  only  to 
the  point  which  they  all  found  most  essential  to  the  fulfill- 
ment of  prior  requirements. 

Mr.  W.  M.  Acworth,  author  of  "  The  Railway  and 
Traders  "  (London,  1886),  wrote  (1892)  : 

"  Your  Interstate  Commission  was  largely  modeled  on 
our  Railway  Commission  •  *  *  *  since  1873,  and 
the  undue  preference  clause  of  your  act  to  regulate  com- 
merce is  copied  almost  verbatim  from  the  English  act 
passed  as  long  ago  as  1854." 

There  our  law  unwisely  stopped.  It  was  as  if  consult- 
ing physicians  had  adopted  the  discredited  cures  known  to 


28 

earlier  science,  but.  discarded  the  latest  and  best  discovery 
for  the  disease  treated,  and  then  blamed  the  patient  for 
his  relapses;  or,  as  if  Congress  had  failed  to  enact  the 
leading  recommendations  of  army  and  navy  experts, which 
were  undeniably  for  the  public  welfare  and  security. 

This  primal  error  made  the  other  mistakes  of  the  Act 
more  marked.  Railway  officers  and  patrons  otherwise  dis- 
posed cannot  be  legislated  into  mutual  rectitude,  especially 
when  their  gains  are  thereby  lessened.  Even  the  divine 
law  has  not  done  that  in  any  calling. 

INTENT  OF  THE  ACT. 

The  act  did  not  intend  to  protect  railways,  and  was 
therefore  unjust.  To  stimulate  ''competition"  it  exempted 
parallel  water  carriers.  It  regarded  the  railways  as  alone 
responsible  for  all  the  conditions  condemned,  and  devolved 
their  corrections  upon  them  alone,  although  it  applied 
theoretical  penalties  to  shippers  who  procured  preferences. 
None  of  its  provisions  were  remedial,  nor  did  it  create  mu- 
tual interests  between  government  and  carriers.  It  held 
to  the  perversion  that  railway  warfare  is  synonymous  with 
peaceful  business  competition.  It  fostered  the  fallacy 
that  while  rates  must  be  alike  via  one  railway,  it  was  pub- 
licly desirable,  and  should  be  made  legal  if  they  were  dif- 
ferent upon  rival  railways,  or,  elsewhere,  that,  however 
different  in  facilities,  rival  railways  could  obtain  equal 
rates.  Finally,  it  has  encountered  legal  reverses  which 
have  induced  laxity  in  its  observance.  These  failures  did 
not  proceed  from  the  administration  of  the  act.  Here, 
more  than  in  foreign  countries,  because  of  our  great  area 
and  more  complex  conditions,  mere  mandates  against  dis- 


29 

criminations  have  failed  because  the  principle  of  giving 
the  parties  affected  a  common  interest  to  obey  the  law 
was  disregarded,  and  because  the  act,  as  it  stands,  does  not, 
and  cannot,  protect  upright  carriers  or  shippers  against  the 
devious  encroachments  of  others  less  so. 

CONSTANT   DEMANDS   FOR  REBATES. 

Railways  do  not  pay  rebates  unasked,  and  the  solicita- 
tions for  them  are  incessant.  Government  has  not  helped 
the  railways  to  educate  forwarders  to  regard  freight  rates 
as  firm  as  are  postage  or  import  rates.  The  importunities 
of  some  shippers,  their  adroit  intimations  as  to  what  other 
carriers  will  concede,  and  their  own  suggestions  that  they 
may  concentrate  or  divert  their  shipments  unless  their 
wishes  are  conceded,  all  devolve  upon  some  companies  not 
only  constant  and  strong  moral  opposition  to  them  and  to 
the  carriers  disposed  to  yield  to  such  persuasions,  but  also 
losses  of  business  and  the  protection  of  their  tariff -pay  ing 
forwarders.  That  such  resistance  sometimes  gives  way  is 
therefore  true,  because  no  company  will  allow  large  and 
permanent  depletions  of  its  business  when  it  can  be  re- 
tained by  like  rates.  When,  for  example,  a  new  railway 
opens,  former  reasonable  rates  are  clearly  more  justified 
because  more  railways  share  the  traffic.  The  newer  line, 
being  usually  weaker,  offers  reduced  rates  to  divert  busi- 
ness from  older  routes,  and  shippers  withhold  freights 
from  the  latter  to  induce  or  compel  them  to  like  or  greater 
concessions,  and  they  usually  succeed. 

Favored  shippers  oppose  all  methods  to  defeat  rebates, 
weak  lines  will  not  remain  without  business,  and  the  strong 
lines  will  not  permanently  lose  theirs.  Devices  and  con- 


30 

ccaled  rates  therefore  inevitably  ensue,  and  are  illogically 
urged  as  desirable  "competition''  and  public  benefits. 

If,  further,  the  ten  (10)  lines  from  Chicago  to  New 
York  each  openly  published  different  public  grain  rates 
ranging  from  twenty  (20)  to  twelve  and  one-half  (12 J) 
cents  per  one  hundred  pounds,  each  rate  would  be  legal  to 
its  line,  but  the  result  would  be  as  discriminating  to  trade 
and  as  hurtful  to  adjacent  and  intermediate  points  as  to 
make  such  different  rates  secretly. 

Per  contra,  if  they  all  held  to  equal  rates  and  conditions, 
some  of  them  could  not  secure  the  shares  of  traffic  to  which 
they  deemed  themselves  entitled  by  their  charters  and 
their  necessities  for  business  and  earnings. 

Ten  years  of  such  actual  practices  and  results  since  the 
act,  clearly  predicted  before  its  passage  from  the  ampli- 
tude of  home  and  foreign  experiences,  have  again  demon- 
strated that  it  is  for  the  public  interest  that  due  and  rea- 
sonable rates  be  upheld  by  legally  empowering  some  lines 
to  concede  portions  of  their  traffic  to  others  which  will  ac- 
cept it,  especially  while  shippers  may  act  or  combine  to 
shuttle  their  traffic  from  line  to  line  and  divide  the  pro- 
ceeds of  their  combinations  to  defeat  such  due  rates. 

It  is  clearly  more  desirable  to  practically  regulate  than 
to  theoretically  increase  such  miscalled  competition,  but 
its  due  regulation  cannot  be  accomplished  without  the  aid 
of  law  or  the  removal  of  its  prohibitions. 

WHAT  THE  RAILWAYS  ASK. 

The  railways  therefore  ask  that  if  some  lines  concede 
parts  of  their  tonnage  or  earnings  to  other  companies  and 
both  they  and  disinterested  shippers  agree  that  such 


31 

method  will  best  resist  the  persuasions  of  some  shippers 
and  the  wavering  of  some  railways,  joint  contracts  for  such 
desirable  mutual  purposes  should  be  legalized.  This  pol- 
icy will  sooner  make  weak  lines  and  shippers  stronger,  all 
forwarders  may  continue  to  use  the  routes  they  desire,  and 
all  lines  may  make  economies  which  will  better  justify  the 
low  present  charges  and  the  betterments  and  extensions  of 
their  facilities.  If  smaller  shippers  assent  that  their  freights 
may  be  used  to  so  equalize  the  joint  tonnage  because  they 
thereby  secure  the  desired  parities  of  rates  with  large  for- 
warders, which  are  their  right  and  necessity,  it  is  a  poten- 
tial and  conclusive  argument.  The  largest  shippers  now 
get  the  best  terms,  while  the  smaller  ones  most  need  them. 
It  is  because  the  Interstate  Act  has  thus  and  so  far  failed 
to  deal  adequately  with  such  discriminations  and  their 
remedy,  that  the  railway  contention  for  pooling  seems 
easily  understandable  and  is  unanswerable.  If  the  gov- 
ernment reserves  its  approval  of  rates,  it  should  also  aid 
in  their  uniform  collection.  Whatever  rates  receive  its 
sanction  should  receive  its  strong  support,  like  its  own 
tariffs,  its  arbitrations,  its  treaty  obligations,  its  interna- 
tional postal  union,  etc.  Government  is  justly  jealous  of 
its  faith  in  all  those  respects,  and  should  be  equally  so  for 
its  carriers/ because  they  have  done,  and  are  doing,  more 
for  its  extension  and  power  than  all  those  other  agencies. 
If,  therefore,  the  carriers  supplement  the  railway  reports 
of  Senatorial  and  House  Committees  and  National  and 
State  Commissions  and  trade  bodies,  as  well  as  those  in 
Europe,  with  pleas  for  a  mere  trial  of  the  system  com- 
mended by  all  those  authorities,  and  further  propose  to 
submit  their  data,  contracts  and  rates  to  governmental 


32 

review  and  approval,  upon  what  defensible  grounds  can 
the  national  Legislature  longer  rely  upon  only  the  present 
inadequate  Act  and  answer  us  in  effect  : 

"It  is  true  you  publish  ostensibly  legal  and  reasonable 
rates ;  collect  them  if  you  can,  but  we  think  competition— 
as  we  understand  it — should  go  on  unregulated  and  pref- 
erential because  otherwise  trade  will  be  restrained  and 
competition  stopped." 

1 1 K  A S( ) X  A IJ LENESS    O F    RATES. 

The  reasonableness  of  rates  is  now  rarely  questioned, 
and  hardly  touches  the  present  discussion.  Mr.  Ximmo 
said  : 

"  During  the  year  ending  December  31,  1893,  only  six- 
teen cases  came  to  a  formal  consideration  and  hearing. 
In  only  one  of  the  cases  decided  was  the  reasonableness 
of  the  rates  called  in  question,  and  in  that  single  instance 
the  claim  was  decided  to  be  not  well  founded." 

There  are  not  less  than  two  million  freight  rates  and 
passenger  fares  in  this  country  applicable  to  interstate 
traffic.  When  this  enormous  aggregate  is  considered, 
that  hundreds  of  transactions  occur  annually  under  each 
rate  or  fare,  and  that  complaints  to  the  Interstate  Commis- 
sion have  not  been  one-hundredth  of  one  per  cent,  of  the 
transactions  related  to  these  tariffs,  such  striking  facts 
should  challenge  legislative  attention  and  prove  that  the 
wrongs  falsely  charged  to  railway  associations  and  pooling 
exist  in  the  minds  of  unintelligent  agitators  or  opponents, 
and  not  with  patrons  who  have  actual  transactions  with 
the  railways. 

Some  assume  that  the  railways  create  all  their  own 
difficulties  and  that  only  their  mutual  determination 
to  observe  joint  tariffs  is  required.  This  is  true  if,  by  law 


33 

or  agreement,  they  all  will  observe  like  rates  and  condi- 
tions; but  no  laws  and  no  agreements  are  universally 
observed  in  any  business  or  between  nations;  hence  the 
multiplicity  of  contentions  and  courts,  and  all  such  critics 
fail  to  realize  the  essential  differences  between  railway 
rivalries  and  environments,  wherein  the  weakest  or  worst 
company  may,  and  does,  make  rates  for  the  strongest  and 
best. 

Stephenson,  the  younger,  therefore  said  to  a  committee 
of  Parliament  : 

"  What  we  ask  is  knowledge.  *  *  *  All  we  ask 
is  a  tribunal  that  is  impartial  and  that  is  thoroughly  in- 
formed, and  if  impartiality  and  intelligence  are  secured 
we  do  not  fear  the  result. " 

We  believe  that  the  pooling  clauses  of  the  Act  of  1887 
were  not  enacted  because  our  legislators  were  not  thor- 
oughly informed.  A  distinguished  Senator  told  his  col- 
leagues in  the  Senate  debate  of  1887  of  the  "utter  and 
lamentable  ignorance  of  what  pooling  contracts  were." 

We  will  endeavor  to  explain  them  in  the  next  article. 


34 


ARTICLE   IV. 

WHAT    RAILWAY    POOLING    IS. 

Pools  usually  mean  the  sales  of  shares  in  ventures  which 
remain  to  be  decided  by  chance  or  fraud,  while  railway 
pooling  means  certainties  of  which  the  public  has  full  and 
published  foreknowledge,  and  in  which  only  the  railways 
incur  the  possible  hazards. 

Railway  pools  do  not  specify  rates,  because  they  cover 
fixed  terms,  during  which  changes  in  rates  may  be  made- 
necessary  by  law,  by  altered  trade  conditions,  by  rates  at 
other  points,  etc.  The  rate-making  function  and  agree- 
ment is,  therefore,  entirely  distinct  and  separate  from  the 
pooling  agreement. 

Senator  Platt  (of  Conn.)  said,  in  18 87  : 

"  What  is  a  pool  ?  It  is  simply  an  agreement  between 
competing  railways  to  apportion  the  competitive  business; 
that  and  nothing  more/' 

This  being  true,  a  legalized  pool  agreement  would  read 
substantailly  as  follows,  in  all  respects  which. touch  public 
interests  : 

"  We  agree  to  report  to  a  joint  officer  and  always  at  the 
tariff*  rates,  weights  and  classifications  applicable  thereto 
as  from  time  to  time  legally  published,  filed  and  approved, 
all  tonnage  carried  by  us  between  the  specified  points. 

"After  each  company  shall  have  retained  -  -  per  cent, 
of  its  gross  receipts  on  its  own  tonnage,  the  sum  of  the  re- 
mainders shall  be  divided  between  them  monthly  in  pro- 
portions agreed  or  arbitrated. 

"All  questions  of  difference  hereunder,  except  those  of 
law,  shall  be  decided  by  arbitration." 


35 

Two  unassailable  transportation  principles  uphold  such 
agreements  and  attention  should  be  drawn  thereto  at  the 
outset. 

Some  standards  of  rates  must  be  reasonable,  and  being 
so  fixed,  approved  by  the  Interstate  Commerce  Commis- 
sion, legally  announced  to  forwarders  before  shipments 
and  uniformly  collected  from  consignees,  the  railways 
then  challenge  proof  of  any  possible  public  wrong  from 
the  division  of  such  legal  proceeds  between  them  as  they 
may  agree.  Only  the  rates  affect  the  public  interest. 
Their  apportionment  is  not  a  just  pubHc  concern  any  more 
than  the  proportions  in  which  railways  share  the  cost  of 
constructing  and  operating  and  the  incomes  from  their 
joint  double  tracks,  union  depots,  belt  lines,  etc. 

POOLS  BENEFIT  THE  PUBLIC. 

Pools  are,  moreover,  for  the  public  welfare,  because 
they  stop  solicitations  for  rebates  and  the  payments  there- 
of ;  they  transfer  uiiconsigned  or  assenting  tonnage  first, 
or  if  not  that,  money,  to  the  carriers  in  deficit  from  the 
acknowledged  overplus  of  their  associates,  who  are  there- 
fore the  only  parties  who  can  be  injured  ;  they  account 
for  all  the  included  traffic  at  the  tariff  rates,  and  if  rebates 
are  nevertheless  paid  which  produce  an  excess  of  any  car- 
rier's due  tonnage,  the  company  thus  unworthily  securing 
such  excess  must  pay  not  only  the  rebates  but  also  the 
excess  tonnage  or  money  balances  to  its  associates. 

Pooling  therefore  stops  rebates  because  each  party  there- 
to shares  the  proceeds  of  observed  legal  rates  and  enjoys 
the  comforts  of  management  and  peace  with  law  and  con- 


36 

science  which  good  faith,  thus  reinforced,  brings  to  both 
associates  and  rivals. 

The  agreeing  carriers  also  share  the  included  competi- 
tive traffic  in  substantially  the  proportions  of  their  pre- 
vious carryings,  while  shippers  continue  to  choose  their 
routes,  because  only  the  traffic  of  assenting  forwarders  is 
used  for  tonnage  equalizations.  Pooling  combines  the 
facilities  of  the  agreeing  lines  as  if  they  were  one  com- 
pany organized  to  carry  the  tonnage  of  a  community  as 
impartially  as  they  would  that  of  one  great  firm.  If  one 
railway  charges  all  the  members  of  one  firm  alike,  it  is  also 
the  best  corporate  and  national  policy  for  all  companies  to 
charge  like  rates  between  the  same  points  to  all  firms  and 
persons. 

SECURES   STABLE  KATES. 

Pooling  secures  stable  rates,  not  only  at  traffic  centers 
but  at  those  local  points  which  depend  thereon,  whereas 
small  shippers  at  both  central  and  tributary  points  now 
incur  two  disadvantages  ;  they  can  neither  sell  to  nor  com- 
pete with  the  large  shippers  at  large  points,  nor  can  they 
ship  against  them  with  equal  profits  from  small  points, 
where  the  rates  are  usually  held  firmly. 

Pooling  gives  the  public  the  united  facilities  of  all  lines 
at  times  of  calamity  or  emergency. 

Proper  emulations  are  stronger  under  pools  which  as- 
sure equal  rates,  because  only  improved  facilities,  speed, 
courtesy  and  promptness  attract  and  retain  business  there- 
under, whereas  rebates  are  now  more  relied  upon. 

Pooling  simply  seeks  to  conduct  competitive  business 
upon  the  impartial  rates  and  rules  observed  at  local  points, 


37 

where  applications  for  preferential  cut  rates  are  not  enter- 
tained, but  where  applications  for  public  reductions  of 
rates  are  considered  and  decided  after  conferences  and 
usually  upon  the  merits  of  the  causes. 

Pooling  secures  uniform  inspections  for  the  detection 
of  those  false  weights,  misdescriptions,  etc.,  by  which  hon- 
orable merchants  may  be  defrauded  by  others  who  are  not, 
and  thereby  further  tends  to  put  all  patrons  upon  equal 
shipping  conditions  as  well  as  rates.  There  were  135,000 
cases  of  misdescription  by  forwarders  detected  by  the  rail- 
ways at  three  seaboard  cities  last  year  on  westbound 
through  freights. 

MOVED  BY  FACTS. 

The  following  facts  sustain  the  foregoing  averments  : 
Former  pooling  actually  diminished  rebates,  and  would 
have  stopped  them  before  now  had  it  been  so  legalized  as 
to  justify  long-term  agreements.  If  honesty  was  not  al- 
ways observed  under  pooling,  it  is  no  argument  against  it. 
It  did  not  cause  bad  faith,  but  checked  it,  and  discrimina- 
tions would  have  increased  without  them.  No  laws  have 
stopped  conquests,  reprisals  or  crimes  among  nations  or 
persons,  therefore  union  and  laws  are  the  more  necessary. 
It  would  be  as  proper  to  allege  that  the  customs  laws  have 
failed  because  undervaluations,  defalcations  and  smuggling 
continue.  Importers  who  undervalue  goods  to  evade  the 
customs  laws  will  misdescribe  their  wares  to  subvert  uni- 
form and  just  transportation  charges.  The  government 
uses  all  its  power  to  stop  such  frauds  upon  its  rules  and 
revenues,  but  the  railways  can  rely  only  upon  separate  ac- 
tion if  the  recent  decision  is  maintained. 


38 

Under  pools  some  tonnage  was  transferred  from  road  to 
load,  but  not  to  the  extent  conjectured.  In  the  last  year 
of  the  eastward  pools  from  Chicago,  St.  Louis,  Peoria,  Cin- 
cinnati, Louisville  and  Indianapolis,  all  the  tonnage 
changed  from  one  route  to  another  at  all  these  points  was 
but  2.2  per  cent,  of  the  total  and  without  a  protest,  from 
shippers.  The  cash  paid  by  all  companies  therefrom  to 
each  other  in  money  settlements  did  not  average  nine  (9) 
cents  per  ton,  whereas  cuts  in  through  rates  are  usually 
fifty  (50)  cents  per  ton,  or  more.  Of  about  $12,000,000 
pooled  freight  earnings,  less  than  $300,000  changed 
hands,  and  over  one-half  the  last  amount  was  returned  to 
those  who  paid  the  excess  balances,  because  to  get  their 
money  back  they  reduced  their  tonnages  and  not  their 
tariff  rates.  Not  a  shipper  or  consignee  was  harmed  by 
any  of  these  results, 

No  American  pool  can  be  cited  which  advanced  rates 
unless  to' restore  unjustifiable  rate-war  reductions.  When 
the  trunk  lines  were  organized  in  1877  the  average  of  tin- 
eastward  and  westward  tariff  class  rates  between  Chicago 
and  New  York  was  seventy-one  cents  per  100  pounds. 
When  they  discontinued  pooling  in  1886,  it  was- under 
fifty  cents. 

None  contend  that  pooling  has  fostered,  or  that  its  le- 
galization will  increase  discriminations,  because  its  pur- 
poses and  effects  are  always  to  minimize  them. 

Do  NOT  RESTRICT  TONNAGE. 

Nor  has  pooling  restricted  tonnage.  The  westward  ton- 
nage from  New  York  City  proper  under  the  above-named 
pool  was  716,000  tons  in  1877  and  1,415,000  tons  in  1893, 


39 

and  although.  New  York  was  most  of  that  time  pooled, 
while  Boston,  Philadelphia  and  Baltimore  were  not,  the 
New  York  tonnage  indicated  the  greater  relative  increase. 
Nor  has  pooling  restricted  any  just  competition  created 
by  the  laws  of  trade,  the  rivalries  of  seas,  lakes  and  rivers, 
or  those  betterments  of  transportation  conditions  which 
cheapen  rates  and  attract  traffic  reasonably  to  the  lines  bet- 
tered. Under  pooling  each  company  preserves  or  in- 
creases its  individual  strength,  which  is  the  true  railway 
competition. 

Then,  upon  what  defensible  grounds  has  pooling  been 
legislatively  antagonized?  It  is  idly  averred  that  pooling 
will  stop  competition,  and  is  meant  to  secure  dividends  for 
watered  stocks.  It  has  even  been  recently  said  in  the  na- 
tional Senate  that  it  will  consolidate  American  railways 
into  one  gigantic  corporation  having  about  twelve  thou- 
sand millions  of  bond  and  share1  capital,  which  will  ad- 
vance rates. 

It  is  difficult  to  discuss  such  screeds  seriously.  To  as- 
sume that  Oregon  and  Florida  railways  will  pool  with  each 
other;  those  in  Florida  with  one  or  more  in  New  Hamp- 
shire; that  the  Philadelphia  and  Reading  Railway  Com- 
pany will  pool  with  the  Mexican  Central,  or  the  Boston 
and  Maine  with  a  Los  Angeles  line,  may  be  used  in  hostile 
heat,  but  it  is  not  intelligent,  because  no  such  instance  is 
on  record,  or  is  contemplated  or  possible. 

COMPARISON    WITH    TRUSTS. 

The  unintelligent  assertion  is  repeatedly  made  that  pool- 
ing will  enable  and  stimulate  railroads  to  combine  as  a 
trust,  whereas  all  forms  of  pooling  ever  suggested  have 
been  the  opposite  of  trusts. 


40 

Trusts  are  antagonized  because  their  methods  are  pub- 
licly believed  to  be  secret,  extortionate,  that  they  combine 
capital  to  fix  and  control  the  prices  of  their  products  and 
that  they  strive  to  prevent  or  annihilate  competition. 

Not  one  of  these  discredited  features  transpires  in  rail- 
way pooling.  Railway  rate  prices  must  be  publicly  an- 
nounced. Not  so  the  prices  of  trust  products.  Railway 
rates  must  be  filed  with  and  receive  the  preliminary  ap- 
proval of  a  governmental  commission  appointed  by  the 
President  and  confirmed  by  the  Senate  of  the  United 
States.  Not  so  with  trusts,  which  may  legally  avoid  or 
evade  such  publicity  and  review.  The  Interstate  Com- 
mission receives  the  detailed  annual  reports  of  the  inter- 
state carriers,  and  publishes  them  to  the  country.  Not  so 
with  trusts.  The  railroad  companies  do  not  control  their 
own  rates,  but  fix,  announce  and  change  them  publicly, 
with  reference  and  concessions  to  great  and  ceaseless  ele- 
ments of .  competition,  or  because  of  undeniable  leniency 
to  weak  or  wavering  railways.  The  trusts  make  their  own 
prices  and  sale  conditions,  and  may  grant  various  terms 
and  preferences.  Railway  prices  must  be  public,  just, 
fair  and  uniform,  and  their  reasonableness  may  be  re- 
viewed and  established  by  the  courts.  Not  so  with  any 
trust  prices.  Railway  rate  prices  are  known  to  all  com- 
peting railways.  Trust  prices  are  withheld  from  tlieir 
competitors,  if  practicable,  and  competition  with  them 
may  be  modified,  merged  or  extinguished.  Trusts  may 
restrict  trade.  Railways  seek  in  tlieir  own  and  the  public 
interest  to  greatly  enlarge  it.  There  is  no  restriction  or 
crushing  out  of  railway  competition,  because  all  competing 
carriers  are  legalized  and  are  ever  living  agencies  of  com- 


41 

merce  and  law.  The  more  crushed  and  the  poorer  a  rival 
railroad  becomes,  the  more  active,  usually,  is  its  competi- 
tion. The  very  reverse  is  the  fact  as  to  trusts. 

Further,  no  railway  is  required  to  join  any  pool  legisla- 
tively sanctioned,  and  if  three  roads  in  five  pool,  the  two 
which  do  not  are  as  fully  and  publicly  advised  of  the 
methods  of  the  other  three  as  if  they  were  parties  to  the 
agreement.  Not  so  with  trusts. 

VOIDING  COMPETITION. 

As  to  voiding  competition,  the  railways  could  contract 
to  divide  money  or  tonnage,  or  both,  and  to  maintain  rates, 
until  1887,  yet  none  of  the  things  now  held  up  to  public 
fear  and  execration  as  to  pooling  ever  transpired.  Why, 
with  all  their  power  and  higher  rates,  did  they  not  then 
stop  parallel  construction,  then  "establish  monopolies," 
and  then  increase  rates,  or  at  least  resist  and  stop  the 
annual  tendency  of  rates  downward?  The  enormous  in- 
crease of  railway  mileage  of  the  United  States,  and  the 
constant  and  voluntary  rate  reductions  are  among  the 
incontrovertible  answers.  They  did  not  attempt  to  do  it, 
and  could  not.  The  unceasing  forces  of  the  great  factors 
of  true  competition  produced  annual  reductions  in  rates, 
and  will  keep  them  low  permanently. 

An  additional  strong  reason,  even  more  forceful  to-day 
than  then,  is  that  railways  sought  to  build  up  large  local  and 
through  traffics  at  low  rates  rather  than  to  carry  less  busi- 
ness at  higher  rates,  a  policy  which  developed  local  traffic 
as  well  as  the  national  tonnage.  By  enlarging  local 
freight  traffic  local  travel  increased,  and  belonged  to  the 
company  which  gave  it  growth.  There  was  no  water 


42 

route  from  Pittsburg  or  local  points  to  Baltimore,  but 
those  points  were  given  the  benefit  of  rates  at  least  as  low 
as  the  rail  rates  from  Buffalo  to  New  York,  which  were 
made  against  the  canal  rates.  In  other  words,  due  compe- 
tition and  enlightened  self-interest  prevailed. 

Pools  did  not  even  preserve  former  dividends  on  railway 
stocks.  Every  company  in  the  Union  which  has  increased 
its  stock  has  reduced  its  average  rates.  If  the  New  York 
Central  Company  should  double  its  bonds  and  shares  this 
year,  it  could  not,  with  all  its  own  powers,  plus  those  of  its 
strong  proprietors  and  allies,  increase  its  average  rate  in 
the  slightest  degree,  because  the  lines  competing  with  it 
would  not  increase  their  capitalizations  or  rates,  and  the 
Erie  Canal,  and  the  Hudson,  St.  Lawrence  and  Mississippi 
rivers,  and  the  competition  of  Galveston,  Baltimore,  Mon- 
treal and  London  would  continue  to  prevent  it. 

THE  TELEGRAPH  CHARGES. 

The  analogy  of  the  present  telegraph  charges  to  railway 
pooling  is  strong  and  convincing.  Simultaneously  with  the 
earlier  construction  of  railways,  parallel  telegraphs  were 
built,  the  one  to  transport  persons  and  property,  the  other 
information.  The  telegraphs  entered  into  what  was  then, 
as  now,  falsely  called  "  competition/'  in  which  they  had 
rate  contests,  lost  money,  struggled  for  capital  and  be- 
came involved  with  legislatures.  They  increased  their 
stocks  and  entangled  interested  railway  companies.  Fi- 
nally the  wires  were  substantially  consolidated.  The 
railways  could  only  amalgamate  connecting  lines,  but  the 
telegraph  companies  combined  parallel  lines. 

When  Mr.  Gould  made  his  telegraph  combinations,  it 


43 

was  widely  alleged  by  many  who  now  deem  railway  pool- 
ing equally  monstrous,  that  he  might  use  the  information 
derived  from  inspected  messages,  to  create  syndicates  and 
fortunes  which  would  threaten  the  Republic.  On  the 
contrary,  although  its  stock  was  increased,  the  Western 
Union  Company  proceeded,  through  desirable  economies, 
to  increase  business,  to  reduce  its  rates,  extend  its  lines, 
increase  its  facilities,  achieve  greater  celerity  in  the  trans- 
mission and  delivery  of  messages,  and  made  them  so 
inviolate  that  it  resisted  even  the  government's  demands 
to  produce  them.  Aside  from  special  telegraphic  charges 
to  government  and  the  press,  and  for  night  messages,  the 
charges  made  territorially  are  uniform,  and  the  users  of 
its  facilities  not  only  no  longer  complain  of  discrimina- 
tions, but  applaud  its  reduced,  well-known  and  unrebated 
charges,  because  they  are  uniform.  No  man  believes  his 
rival  pays  less  to  that  company  than  he  does  for  a  like 
service.  Its  business  is  practically  postal  without  law. 
Substantially,  railways  seek  corresponding  rights  to  agree 
legally  with  parallel  transporters,  in  order  that  they  also 
may  maintain  those  sound  principles  and  charges,  to  be 
guarded,  however,  in  the  railway  instance,  by  due  national 
regulation.  The  telegraph  results  clearly  represent  better 
commercial  and  public  conditions  without  law,  than  the 
disturbing  railway  conditions  under  the  Interstate  Com- 
merce and  Anti-Trust  Acts  and  decisions. 

INCONTROVERTIBLE  FACTS. 

As  these  facts  cannot  be  controverted,  the  railways  de- 
sire those  distinctive  grants  of  authority  for  legal  organi- 
zation which  will  remove  business  and  legal  doubt,  and 


44 

which  are  as  practicable,  effective  and  necessary  in  railway 
administration  as  to  organize  and  conduct  Chambers  of 
Commerce,  Stock,  Maritime  or  Produce  Exchanges  and 
Boards  of  Trade.  The  same  principle  requires  the  union 
and  concert  of  counties  in  the  State  and  of  the  States  in 
Congress.  The  New  York  Clearing  House,  with  annual 
clearances  fifty  times  the  gross  yearly  railway  receipts, 
has  proven  a  national  bulwark  of  finance,  and  assists  all 
right  fiscal  purposes  and  doers.  That  one  or  more  of  such 
bodies  sometimes  do  wrong  is  an  argumen^  for  them,  be- 
cause their  principles  and  deeds  show  high  averages  of 
rectitude  and  public  benefit  and  they  correct  those  wrongs. 

When,  however,  railways  seek  to  adopt  like  sound  busi- 
ness methods  to  enable  them  to  practically  and  publicly 
exercise  these  beneficial  public  principles,  law  denounces, 
legislation  condemns  and  decisions  hamper  them,  and  have 
done  so  for  too  many  years. 

It  is  time  this  was  changed,  and  that  more  just  consider- 
ation be  now  given  to  the  great  benefits  they  have  wrought, 
and  to  the  facts  and  experiences  which  have  exploded 
many  prejudices  and  theories  of  the  past. 

These  benefits  will  be  discussed  next. 


45 


ARTICLE    V. 

RAILWAY    CLAIMS    TO    LEGISLATIVE    RELIEF. 

A  generation  ago  orations  applauded  the  opening  of  new 
railway  lines  because  they  would  develop  new  and  great 
arable  areas  at  the  rates  then  current.  Reductions  of  such 
former  rates  were  sometimes  publicly  opposed.  A  State 
convention  at  Syracuse  in  December,  1858,  resolved  : 

"  To  recommend  the  passage  of  a  law  by  the  next  Legis- 
lature which  shall  confine  the  railroads  of  this  State  to 
the  business  for  which  they  were  originally  created.77 
(Local  traffic.) 

The  average  rate  of  the  New  York  Central  Company  in 
that  year  was  3.18  cents  per  ton  per  mile,  equal  to  TO  cents 
per  100  pounds  on  grain  from  Buffalo  to  New  York.  The 
rate  now  is  not  more  than  nine  (9)  cents  per  100  pounds. 
In  1873  the  all-rail  grain  rate  from  Chicago  to  New  York 
was  55  cents  per  100  pounds.  It  is  now  20  cents  on  wheat 
and  15  cents  on  exported  corn. 

In  1873  the  freight  rates  upon  70,268  miles  of  railway 
then  built  averaged  2.21  cents  per  ton  pei  mile  for  168,- 
000,000  tons  carried.  In  1895  the  rate  averaged  .839  of 
one  cent  for  763,800,000  tons  carried  upon  179,162  miles 
of  railway,  producing  gross  freight  revenues  of  $743,784,- 
451,  the  rate  for  1873  being  over  263  per  cent,  of  the  rate 
in  1895.  At  the  average  rate  charged  in  1873  the  freight 
earnings  in  1895  only,  would  have  been  $1,215,344,000 
more  than  they  were,  over  eighty  millions  more  than  the 
entire  indebtedness  of  the  States  and  Territories  in  1890. 


46 

Hon.  Edward  Atkinson  says  that  in  1895  ten  and  three- 
fourths  tons  of  food,  fuel,  fibres  and  fabrics  were  moved 
126  miles  by  railway  for  each  of  71,000,000  inhabitants 
for  $10.47  per  capita,  and  that 

"A  generation  since  a  charge  of  treble  that  sum  was 
deemed  a  great  achievement,"  which  "  *  would 

have  been  $31.41  per  head." 

Railway  owners  have  not  correspondingly  benefited. 
In  1872,  57,533  miles  of  railway  paid  stock  dividends  of 
$64,418,157,  or  $1,120  per  mile.  In  1895,  179,162  miles 
operated  paid  $81,375,774  in  dividends,  or  but  $454  per 
mile,  being  but  40  per  cent,  of  the  dividends  per  mile  paid 
in  1872.  The  mileage  increased  310  per  cent.,  the  divi- 
dends 26  per  cent. 

RAILWAY  EARNINGS. 

Of  American  railway  earnings  in  1895,  68  per  cent, 
was  derived  from  freights,  24  per  cent,  from  passengers, 
and  8  per  cent,  from  miscellaneous  sources.  The  gross 
earning  upon  each  ton  of  freight  moved  in  that  year  was 
97  cents  and  48  cents  upon  each  passenger  carried.  The 
addition  of  but  one  cent  per  ton  on  each  ton  carried  in 
1895  would  have  been  $7,638,000,  and  one  cent  on  each 
passenger  carried  would  have  been  $5,439,742,  or  over 
$13,000,000,  calling  one  ton  of  freight  and  one  passenger 
equal  revenue  producers. 

Apportioning  the  amount  paid  as  dividends  upon  stock 
in  1895  in  the  above  proportion,  the  freight  traffic  would 
be  chargeable  with  $55,335,526  and  the  passengers  with 
$19,530,187,  equal  to  but  7.2  cents  per  ton  and  3.6  cents 
per  passenger  carried. 


47 

Poor's  Manual  reports  for  1895,  $5,182,122,000  of  rail- 
way stock  capital  outstanding.  The  dividends  on  stock  in 
that  year  being  $81,375,774,  the  average  rate  of  dividends 
was  1.57  per  cent.  The  Government  reports  say  that 
nothing  was  paid  in  that  year  on  $3,475,640,253  of  this 
stock,  being  68  per  cent,  of  the  whole  amount  outstanding. 

Even  had  the  average  charge  for  transporting  one  ton 
one  mile  which  obtained  in  1888 — the  first  full  year  of 
the  Interstate  Act — been  charged  in  1895,  the  freight  rev- 
enues of  the  latter  year  would  have  been  $122,223,523 
more  than  they  were,  yet  railway  taxation  increased  in  the 
same  period  from  $25,435,229  to  $39,250,000,  or  54  per 
cent.  These  facts  seem  to  prove  a  sufficient  evaporation 
of  the  "  water  "  in  stocks  to  satisfy  the  most  optimistic 
hydraulicon. 

RAILWAY  INVESTORS. 

The  number  of  railway  investors  is  also  too  often  ig- 
nored. The  Eastern  Trunk  Lines  report  that  their  share- 
holders number  99,826.  To  this  add  the  share  and  bond 
holders  on  the  same  and  all  other  American  railroads.  One 
Eastern  line  reports  that  50  per  cent.,  and  the  Pennsyl- 
vania Railroad  Company  ihat  40  per  cent,  of  its  share- 
holders are  women. 

At  the  same  ratio  of  shareholders  to  mileage,  the  total 
number  of  stockholders  in  the  railways  of  the  Union 
would  be  over  950,000,  not  including  bondholders.  Call- 
ing the  total  1,250,000  of  bond  and  share  holders  at  home 
and  abroad,  they,  with  785,000  employees,  make  over  2,- 
000,000  persons  dependent  upon  or  interested  in  our  rail- 
ways. Assuming  each  reported  adult  to  represent  five  per- 


48 


sons,  the  total  number  affected  by  railway  results  is  ten 
millions  of  persons,  exclusive  also  of  those  interested  in  the 
manufacture  or  production  of  locomotives,  cars,  rails,  other 
iron  products,  wheels,  lumber,  cross-ties,  stone,  paints, 
plushes,  oils,  paper,  etc.,  used  by  the  railways  and  now  in 
stagnant  states  of  production,  largely  because  the  railways 
lack  even  ordinary  prosperity. 

The  total  number  of  employees  of  the  United  States 
Government  June  30,  1896,  was  220,594,  excluding 
judicial  and  legislative  appointees,  but  including  the  army 
and  navy  and  the  marine  corps.  The  number  of  railway 
employees  in  1895  was  785,034,  being  88,568,  or  11  per 
cent,  less  than  1893,  although  the  railway  mileage  had  in- 
creased 4,380  miles.  The  number  of  persons  employed 
per  mile  operated  in  1893  was  5.04  and  but  4.38  in  1895, 
a  reduction  of  over  13  per  cent. 

AMERICAN  AND  FOREIGN  RATES. 

A  comparison  of  the  rates  charged  on  American  and 
foreign  railways  for  1892  produced  the  following  results  : 


FOK  PASSEN- 

Ci  RRS, 

PER  MILE. 

FOR  FREIGHT, 
PER  TON 
PER  MILE. 

United  States  

2  14  cents 

0.97  cents. 

Prussia      

2.09      " 

1.32      " 

3  05      " 

1.56      " 

France              

3  30      " 

1.59      " 

Belgium                    

2.25      " 

1.39      f1 

English  railway  accounts  are  not  stated  per  ton  mile 
and  their  rates  usually  also  include  cartage.     A  compari- 


49 

son  is  therefore  difficult,  but  a  treatise  by  Edward  Bates 
Dorsey  upon  "  American  and  British  Railways  Com- 
pared/?  which  was  awarded  the  Norman  medal  of  the 
American  Society  of  Civil  Engineers,  said  of  the  freight 
rates  in  1886  : 

"  The  rate  as  given  from  Liverpool  to  Birmingham, 
ninety-seven  miles,  on  grain  and  flour,  is  $3.01  per  gross 
ton,  and  the  rate  as  given  from  Chicago  to  New  York, 
1,000  miles,  is  $5.60  per  gross  ton."  (It  is  now  $4.48.) 

J.  S.  Jeans  on  "Railroad  Problems"  (London,  1886), 
said  as  follows: 

"  English  railways  practically  work  on  the  same  tariffs 
to-day  they  did  in  the  infancy  of  the  system,"  and  "  It  is 
probable  that  the  average  ton  mile  rate 'on  English  rail- 
ways will  not  be  much  if  any  under  l^d.  (three  cents), 
which  is  just  three  times  the  amount  charged  on  the  prin- 
cipal American  lines." 

Our  best  late  information  is  that  our  rates  have  been  re- 
duced since  then  more  per  mile  than  have  theirs. 

The  average  receipts  of  all  European  railways  in  1890 
were  $9,800  per  mile;  ours  $5,700,  or  but  fifty-nine  per 
cent,  as  much. 

If  these  annual  reductions  in  American  railway  rates 
continue  they  will  stop  investments  of  capital  for  con- 
struction and  betterment,  will  impair  the  physical  condi- 
tions of  the  railways  most  affected,  will  induce  inferior  ser- 
vice with  increased  risks  to  persons  and  property,  and 
cause  yet  greater  depletions  of  the  values  of  railway  se- 
curities. This  will  be  mainly  caused  by  so-called  "compe- 
tition," brought  about  or  encouraged  by  adverse  legisla- 
tion, by  withholding  proper  legislation,  by  erroneous  legal 
judgments,  or  from  some  combination  of  those  hurts. 


We  have  26.5  miles  of  railway  for  every  10,000  inhab- 
itants, while  Great  Britain  and  Ireland,  Germany,  France 
and  Austria-Hungary  average  but  5.4  miles. 

AMERICAN  AND  FOREIGN  WAGES. 

Contrasting  the  wages  of  American  and  foreign  rail- 
way labor,  the  following  statement  will  suffice,  as  the 
same  ratio  extended  substantially  through  other  branches 
of  railway  service: 


PEB 

DAY. 

PER  MONTH 

Engineers. 

Firemen. 

Conductors. 

United  Stntea 

$3  65 

$2  05 

$82  40 

England 

1  25  to  $1  87 

75  to  S'  12 

30  40 

France 

1  00  to     1  16 

75  to        P3 

Germany 

81  to     1  25 

62  to        81 

28.30 

Belgium 

.81  to        89 

50  to        60 

Holland          

.83  to     1  04 

54  to        72 

Hungary  ....'.  

32.40 

This  comparison  is  yet  more  favorable  to  American 
railway  labor  when  the  longer  hours  and  more  onerous  con- 
ditions which  constitute  a  day's  work  abroad  are  consid- 
ered. 

There  must  be  points  below  which  reductions  of  rail- 
way rates  should  not  in  equity  be  borne  entirely  by  rail- 
way owners.  No  reason  can  be  fairly  alleged  that  the 
farm  labor  of  Kansas  should  be  reduced,  while  the  railway 
labor  of  New  York  is  maintained  without  reduction. 

When  not  only  rates  are  greatly  lower,  but  wages  and 
taxation  are  higher,  American  labor  must  ultimately  share 
the  losses  if  the  public  good  is  in  question  and  the  incessant 


51 

tendency  of  legislatures  and  courts  to  reduce  rates  and 
fares  continues. 

The  Board  of  Trade  and  Transportation  of  New  York 
well  said  in  February,  1896: 

"  Rates  may  be  too  low  as  well  as  too  high  for  the  pub- 
lic interest." 

Most  railways  were  first  constructed  to  connect  impor- 
tant objective  points  between  which  there  was  substan- 
tially no  local  traffic  until,  in  conjunction  with  immigra- 
tion, opening  mines,  etc.,  which  the  railways  most  stimu- 
lated, the  intermediate  traffic  was  developed.  Whatever 
bonds  or  stocks  were  issued  to  construct  such  lines,  their 
holders  were  compelled  to  await  returns  thereon  until  the 
sparse  territories,  built  through  them,  furnished  adequate 
business.  Before  such  better  results  were  reached  many 
of  the  railway  companies  defaulted  upon  their  interest, 
were  sold  out  and  reorganized,  and  much,  if  not  all,  of  the 
so-called  water  was  thus  pressed  out  of  them  then.  .  How- 
ever much  the  railways  lost,  the  country  traversed  inva- 
riably benefited  greatly. 

After  this  earlier  period  of  much  loss  and  long  waiting 
for  railway  returns  there  was  a  short  intermediate  period 
of  comparative  peace,  but  more  recently  reasonable  reve- 
nues are  again  jeopardized  or  reduced  by  law,  by  unregu- 
lated strife,  by  stringent  interpretations,  general  legisla- 
tion, the  failure  to  sanction  reasonable  rate  agreements 
and  by  drastic  legal  definitions.  The  railway  history  of 
the  United  States  does  not  therefore  prove  that  even  aver- 
age fair  returns  have  come  to  the  railway  capital  actually 
invested,  that  it  has  received  the  average  profits  yielded 


52 

by  other  investments,  or  that  the  nation  appreciates  the 
value  of  the  carriers  to  its  highest  development  and  power. 
More  legislative,  legal  and  commercial  consideration  for 
railway  interests  seems,  for  all  these  strong  reasons,  a  long 
deferred  justice,  especially  as  the  form  in  which  it  is 
urged  will  also  conserve  the  public  weal.  One  alternative 
is  more  railway  consolidations  and  the  survival  of  the 
strongest  corporations,  when  the  desired  uniformity  of 
rates  will  more  fully  ensue. 

LEGISLATION  MORE  RESTRICTIVE. 

These  facts,  arguments  and  conclusions  remain  uncon- 
troverted,  yet  National  and  State  legislation  grows  more 
hostile  and  legal  decisions  more  stringent.  'Not  only  has 
there  been  no  Congressional  recognition  of  interstate  rail- 
way benefits,  but  consideration  therefor  has  decreased  as 
those  benefits  have  become  more  apparent.  National  and 
State  legislatures  constantly  consider,  or  enact,  additional 
restrictions  upon  the  railways,  and  courts  inherit  and  pro- 
claim this  tendency.  Within  five  years  numberless  Na- 
tional, State  and  municipal  measures  have  been  enacted  or 
entertained  or  are  now  pending,  to  reduce  rates  and  fares, 
for  pro  rata  rates,  amended  bills  of  lading,  car  couplers, 
automatic  brakes  and  safety  appliances,  more  protection 
for  labor,  grade  crossings,  speed  of  trains,  elevated  tracks 
in  cities,  reduced  working  hours,  legislation  as  to  strikes, 
more  taxation,  etc.,  all  intending  to,  or  producing,  de- 
creased net  railway  revenues. 

There  were,  for  example,  over  thirty  measures  pending 
in  the  Fifty-third  Congress  affecting  railways,  but  one — 
the  pooling  amendment — being  for  their  relief,  and  it 
was  unhappily  defeated.  If  the  public  good  requires  ad- 


53 

ditional  import  measures  to  protect  tin  makers,  farmers, 
lumbermen,  importers  of  silk,  etc.,  and  national  finances, 
should  not  railway  owners  and  employes  be  also  now  rea- 
sonably protected  in  some  due  and  well  regulated  manner, 
since  they  most  make  effective  the  cheap  and  quick  distri- 
butions of  American  products  throughout  the  nation  and 
world? 

To  this  mutual  end  two  views  are  to  be  reconciled: 
One,  the  fear  that  if  pools  are  authorized  rates  will  be  ad- 
vanced; the  other,  the  conviction  of  the  railways  that, 
without  pooling,  competitive  rates  will  become  yet  more 
unprofitable  and  disastrous. 

WHAT  TIIE  RAILWAYS  PROPOSE. 

'The  railways  propose  to  protect  the  public  in  the  first 
instance  by  submitting  their  rates  to  the  preliminary  re- 
view of  the  Interstate  Commerce  Commission.  They 
propose,  on  the  other  hand,  that  the  carriers  be  empow- 
ered to  stop  undue  depletions  of  those  rates  by  enforceable 
agreements,  and  that  they  be  legally  enabled  to  collect 
and  enjoy  their  reasonable  published  charges,  through  the 
agency  of  pooling,  which  shall  also  be  open  to  govern- 
mental approval  and  current  inspections  and  reports.  If 
fairness  and  intelligence  and  the  precedents  of  all  experi- 
ence are  to  be  regarded,  as  in  all  other  leading  acts  of 
government,  law  and  justice,  110  valid  objections  lie 
against  these  proven  mutual  benefits,  and  all  interests' 
should  be  able  to  agree  upon  the  needed  consummation. 

In  a  word,  we  claim  small  relief  for  great  benefits  con- 
ferred. 

We  will  show  next  how  pooling  has  been  recognized 
and  indorsed. 


54 


ARTICLE    VI. 

INDORSEMENTS    OF    POOLING. 

The  extent  to  which  pooling  has  been  considered  by 
legislatures,  trade  bodies,  State  railway  commissions  and 
individuals,  and  the  changes  in  the  opinions  of  important 
persons  and  commercial  associations,  constitute  important 
testimony  in  the  railway  behalf. 

The  Cullom  committee  of  1886  especially  considered 
pooling,  and  of  149  persons  whom  it  questioned,  42 
favored  pooling  generally,  26  favored  legalized  pools,  41 
pools  with  legal  and  other  restrictions,  and  no  witness 
offered  any  acceptable  substitute  for  pooling. 

For  these  reasons  that  committee  reported  in  1880  : 

"It  would  seem  wiser  to  permit  such  agreements  rather 
than  by  prohibiting  them  to  render  the  enforcement  and 
maintenance  of  agreed  rates  impracticable." 

Further  : 

"  The  committee  does  not  deem  it  prudent  to  recom- 
mend the  prohibition  of  pooling."  And  "  The  ostensible 
object  of  pooling  is  in  harmony  with  the  spirit  of  regula- 
tive legislation." 

Still  further  : 

"  The  majority  of  the  committee  arc  not  disposed  to 
endanger  the  success  of  the  methods  of  regulation  pro- 
posed for  the  prevention  of  unjust  discriminations  by 
recommending  the  prohibition  of  pooling/' 

The  law  that  committee  first  submitted  therefore  pro- 
vided : 

"  Said  Interstate  Commission  shall  especially  inquire 
into  that  method  of  railway  management  or  combination 


55 

known  as  pooling  and  report  to  Congress  what,  if  any,  leg- 
islation is  advisable  and  expedient  upon  the  subject." 

Senator  Cullom  says  that  Judge  Reagan,  of  Texas,  then 
Chairman  of  the  House  Committee  on  Commerce,  mainly 
defeated  this  majority  of  witnesses,  and  the  conclusions 
of  his  committee  to  legalize  pooling  as  proposed  in  the 
act  reported. 

Judge  Reagan  went  thence  to  the  United  States  Senate, 
and,  having  thereafter  became  a  Railway  Commissioner 
of  Texas,  he  frankly  said  : 

"  Farther  study  has  caused  me  to  believe  that  the  (5th) 
Section  may  be  amended  so  as  to  benefit  both  the  railroads 
and  the  people  by  allowing  the  railroads  to  enter  into  traf- 
fic arrangements  with  one  another." 

'Now  THINK  DIFFERENTLY. 

Among  other  prominent  men  who  have  as  frankly 
changed  their  views  are  Hon.  Charles  S.  Smith,  late  presi- 
dent of  the  New  York  Chamber  of  Commerce;  Hon. 
Simon  Sterne,  the  counsel  for  the  New  York  Board  of 
Transportation  against  the  railways  of  New  York,  and 
others. 

Mr.  Smith  said  : 

"  Pooling  certainly  has  some  good  points  for  share- 
holders and  the  public;  it  does  prevent,  to  some  extent, 
unjust  discriminations;  it  aims  to  treat  all  alike." 

Mr.  Sterne  said  of  pools  : 

"  They  have  brought  about  a  change  for  the  better 
from  that  which  prevailed  before  the  pooling  arrange- 
ments were  made." 

Prof.  Atwater,  of  Princeton,  described  pools  as  agree- 
ments among  railways  : 

"  For  each  to  accept  as  its  share  of  the  competitive  busi- 
ness at  a  moderately  remunerative  rate  common  to  all 


56 

what  shall  be  judged  to  be  its  just  proportion  by  an  um- 
pire or  board  selected  by  them  to  make  the  apportion- 
ment." 

The  attention  of  the  first  Interstate  Commerce  Commis- 
sion was  promptly  directed  to  this  subject,  and  their  first 
annual  report  said  : 

"  The  scheme  of  pooling  rates,  or  the  earnings  from 
traffic,  was  devised  and  pnt  in  force  as  a 

means  whereby  steadiness  in  rates  might  be  maintained.'7 

The  same  report  further  said  : 

"  The  scheme  was  one  which  was  made  use  of  in  other 
countries,  and  had  been  found  of  service  to  the  roads.'1 
And:  "  *  the  absolute  sum  of  the  money  charges 

exacted  for  transportation,  if  not  clearly  beyond  the 
bounds  of  reason,  was  of  inferior  importance  in  compar- 
ison with  the  obtaining  of  rates  that  should  be  open, 
equal,  relatively  just  as  between  places,  and  as  steady  as 
in  the  nature  of  things  was  practicable." 

The  Eailway  Commissioners  of  Kansas  said,  in  1885  : 

"  Since  the  violent  connections  of  rates  consequent  on 
rate  wars  between  rival  lines  result  usually  in  discrimina- 
tive benefits  to  a  few  at  the  ultimate  expense  of  the  pub- 
lic, means  should  be  taken  to  at  least  moderate  this  dis- 
turbing element  to  the  business  interests  of  the  country. 
As  a  means  to  this  end,  we  venture  to  suggest  that  con- 
tracts or  agreements  between  rival  companies  to  carry  on 
interstate  traffic  upon  common  rates,  providing  those  rates 
are  reasonable  and  just,  should  be  invested  with  a  legal 
status  and  be  enforceable  with  appropriate  sanctions." 

The  average  rate  for  freight  in  that  year  was  1.036 
cent  per  ton  per  mile.  It  was  .830  of  one  cent  in  1S!)5, 
or  but  80  per  cent,  as  much. 

JUDGE  COOLEY'S  VIEWS. 
Judge  Cooley  said  : 

"The  avowed  purpose  in  pooling  is  to  avoid  ruinous 
competition  between  the  several  roads  represented  and  the 


57 

unjust  discrimination  between  shippers  which  is  found 
invariably  to  attend  such  competition.  *  *  It 

may  therefore  be  taken  as  agreed  that,  so  far  as  pooling 
arrangements  have  the  correction  of  this  subject  in  view, 
the  purpose  is  commendable." 

He  said  further  : 

"  Without  the  aid  of  the  law  to  enforce  pooling  ar- 
rangements it  is  not  yet  apparent  that  any  scheme  can  be 
devised  whereby  the  cutting  of  rates  can  be  effectually 
prevented." 

He  said  in  an  address  delivered  to  the  Boston  Mer- 
chants' Association,  January  8,  1889  : 

u  The  old  pooling  Avas  never  so  harmful  as  some  persons 
supposed,  and  was  probably  condemned  by  law  more  be- 
cause of  what  it  was  feared  it  would  become  or  might  be- 
come than  because  of  what  it  was." 

He  also  said  to  a  convention  of  State  Railway  Commis- 
sioners, in  Washington,  May  20,  1890  : 

"  It  may  seem  altogether  proper  that  the  government 
should  make,  or  permit  to  be  made,  some  provisions 
whereby  the  comparatively  feeble  road  may  be  supported, 
not  entirely  by  the  resources  of  the  district  which  it 
serves,  but  to  some  extent  also  by  a  tax  upon  the  business 
or  resources  of  other  roads.  A  provision  to  this  end  is 
not  uncommon." 

Charles  Francis  Adams  said  : 

"  The  practice  known  as  pooling,  which  the  Interstate 
Commerce  Act  inhibits,  was  merely  a  method  through 
which  the  weaker  railroad  corporations  were  kept  alive. 
To  prevent  excessive  and  unequal  competition  business 
was  so  divided  that  the  less  favored  corporation  had  some 
share  of  traffic  assigned  it." 

Ex-Commissioner  Walker  said,  June,  1893  : 

"  The  pooling  of  freights  or  of  earnings  is  the  only 
practice  ever  known  in  the  history  of  the  world,  short  of 
common  ownership,  by  which  such  a  resolute  maintenance 
of  rates  as  is  justly  required  by  law  for  the  prevention  of 


58 

unjust  discrimination  can  be  secured.  In  other  words,  it 
is  seen  at  last  that  a  fair  division  of  competitive  traffic 
would  he  an  aid  and  support  to  the  regulative  statute." 

The  Minneapolis  Board  of  Trade,  in  its  appeal  to  Con- 
gress in  1892,  said  : 

"  The  railroad  pool  honestly  administered  is  the  natural 
balance  wheel  of  interstate  commerce." 

Prof.  Hadley  said  to  the  Commercial  Club  of  Chicago 
in  April,  1894  : 

"  Pools  were  better  administered  in  1SSO  than  in  1877, 
and  better  in  1886  than  in  1880." 

In  1893  the  United  States  Senate  referred  the  subject 
to  the  Interstate  Commerce  Commission  for  reconsidera- 
tion, whereupon  the  latter  asked  commercial  bodies  and 
others  as  to  the  advisability  of  amending  the  Interstate 
Act  so  as  to  legalize  "pooling  contracts  which  would  tend 
to  diminish  unlawful  discriminations." 

Eighty-nine  (89)  answers  favored  that  proposition,  or 
the  entire  repeal  of  the  Interstate  Act. 

In  June,  1894,  a  conference  of  commercial  interests  in 
Washington,  representing  twenty-three  States  and  eighty- 
seven  trade  bodies,  unanimously  recommended  the  passage 
of  the  Patterson  bill,  which  has  now  been  modified  to 
more  favor  the  public  in  the  Foraker  bill. 

SEVEN  YEARS'   EXPERIENCE. 

After  seven  years  of  experience  under  the  Interstate 
Act  pooling  was  also  indorsed — in  Washington,  December, 
1894— by  all  the  State  Railway  Commissions,  except 
Minnesota,  at  which  time  it  was  resolve*  1 : 

"  That  competing  carriers  may  safely  be  permitted  to 
make  lawful  contracts  with  each  other  for  the  apportion- 


59 

meiit  of  their  traffic  or  the  earnings  therefrom,  provided 
conditions  and  restrictions  axe  imposed  which  protect  the 
public  from  excessive  and  unreasonable  charges." 

The  most  recent  authoritative  expression  upon  this  sub- 
ject was  that  of  the  National  Convention  of  Railroad  Com- 
missioners held  in  Washington  in  May,  1896,  when  Hon. 
J.  H.  Reagan,  of  Texas,  chairman,  who  had  once  so 
strongly  opposed  pooling,  reported  as  follows,  after  sug- 
gesting that  "  the  Interstate  Commerce  Commission  "  be 
empowered  "  to  make,  regulate  and  maintain  rates  on 
interstate  shipments  of  freight  :  " 

"  I  have  believed  and  do  believe  that  the  pooling  of 
freights  and  division  of  earnings  could  be  authorized  by 
law  and  so  regulated  as  to  prevent,  to  a  large  extent,  if 
not  entirely,  railroad  wars  and  unjust  discriminations  in 
freight  rates,  with  advantage  both  to  the  railroads  and  to 
shippers." 

A  separate  report  by  Mr.  Lape,  of  the  Illinois  Railway 
Commission,  said  of  pooling  : 

It  would  be  a  great  benefit  to  the  entire 
public,  as  well  as  the  railroads." 

In  the  same  report  he  said  further  : 

"  I  therefore  give  it  as  my  opinion  that  a  law  should  be 
passed  legalizing  the  pooling  of  freight  earnings  by  rail- 
road companies,  under  the  inspection  and  approval  of  the 
Interstate  Commerce  Commission.  Because  it  would 
protect  the  weaker  lines;  protect  railroad  property  as  a 
whole ;  protect  the  smaller  shipper  as  against  unfair  ad- 
vantages possessed  by  the  larger  shipper,  and  would  secure 
first-class  railroads  and  railroad  service  for  both  freight 
and  passengers,  and  in  addition  to  all  these  advantages, 
the  working  classes  would  unquestionably  be  benefited  to 
a  great  extent." 

No  objection  was  offered  to  either  of  these  reports. 


60 

The  Committee  on  Government  Ownership,  ('mil  ml 
and  Regulation  of  Railways,  reported  to  the  same  con- 
vention, without  dissent  : 

"  Congress  must  legalize  pooling  in  order  to  make  it  an 
effectual  remedy  for  rate  wars." 

The  National  Board  of  Trade  has  twice  recommended 
such  legislation.  All  these  judgments  received  the  ap- 
proval of  the  House  of  Representatives  in  the  Fifty-third 
Congress  by  a  majority  of  fifty-six,  and  the  Senate  Com- 
mittee on  Commerce  reported  the  bill  favorably  at  the 
same  session. 

AN  ENGLISH  AUTHORITY. 

As  to  experiences  abroad,  Mr.  Acworth,  of  London, 
said  in  the  New  York  "Independent"  (October,  1892)  : 

"  Certain  it  is  that  rate-cutting  has  been  practically  put 
an  end  to  by  an  understanding  between  the  companies 
which,  like  international  law,  has  no  sanction  behind  it 
except  the  agreement  of  the  high  contracting  parties. 
*  Over  a  considerable  part  of  England  the  traffic 
is  pooled.  *  *  * 

"  Some  of  these  pools  are  subject  to  revision  every  ten 
years,  others  I  believe,  to  be  agreements  in  perpetuity, 
but  in  this  latter  case  they  are,  perhaps,  more  of  the 
nature  of  partitions  of  territory  than  traffic  pools." 

He  also  said  in  the  same  article  : 

"  To  pools  properly  so-called  there  does  not  seem  to  be 
any  popular  objection.  Indeed,  within  the  last  year  t lie- 
two  great  Scotch  companies,  the  North  British  and  the 
Caledonian,  have  agreed  to  a  twenty-five  years'  pool  of 
their  traffic,  and  though  there  was  a  good  deal  of  opposi- 
tion in  Glasgow  when  it  was  first  announced,  within  the 
last  few  weeks  the  Glasgow  traders  have  confessed  that 
they  were  mistaken  and  that  none  of  the  ills  which  they 
anticipated  have  arisen.  *  *  But  the  fact  is  the 


61 

public  sec  what  looks  like  competition  going  on  all  around 
them.  As  traders  they  see  the  canvassers  of  the  different 
companies  coming  to  them,  hat  in  hand,  and  begging  for 
traffic,  promising  a  later  departure,  more  careful  handling 
and  more  prompt  delivery,  it  may  be  more  generous  set- 
tlement of  claims.  As  passengers  they  see  the  companies 
vieing  with  one  another  in  improvements,  in  accommoda- 
tions, in  frequency  of  service  or  increased  speed,  as  well 
as  in  a  score  of  details  which  make  up  the  comforts  of 
passenger  travel.  Accordingly,  when  the  theorist  comes 
along  with  his  assurance  that  competition  is  extinct  and 
that  pools  have  done  the  mischief,  they  are  apt  to  shrug 
their  shoulders  and  take  not  much  notice." 

AMEKICAN  RAILWAY  RATES. 

One  feature  of  American  railway  rates  is  too  often  for- 
gotten. It  is  alleged  that  they  are  usually  made  arbi- 
trarily, and  are  excessive,  whereas,  it  is  believed  that, 
aside  from  the  reduced  tariffs  due  to  natural  competitive 
forces,  and  the  changes  wrought  in  local  rates  by  the  long 
and  short  haul  clause  of  the  Interstate  Act,  95  per  cent,  of 
all  other  rates  have  been  reduced  to  their  present  low  bases 
by  conference,  discussion,  trial,  change  and  ultimate  agree- 
ment between  the  large  producing  and  consuming  inter- 
ests of  the  country  and  the  railways,  so  that  the  Interstate 
rates  now  published  and  filed  substantially  meet  all  the 
requirements  of  powerful  competition  and  of  the  law,  and 
have  the  public  approval.  At  all  events,  no  appreciable 
percentage  of  the  rates  is  complained  of  on  that  score. 
Secret  and  preferential  reductions  from  such  rates  should, 
therefore,  the  more  promptly  cease  ;  yet  while  asking 
means  to  that  end  from  the  national  Legislature  there 
should  also  be  a  closer  supervision  of  railway  management 
by  railway  financiers,  owners  and  officers. 


62 

While  many  of  the  difficulties  which  embarrass  the  rail- 
ways could  be  corrected  by  the  sterling  good  faith  which 
characterizes  the  management  of  English  railways,  the 
equality  of  their  lines  in  distance  and -facilities,  their  short 
distances  and  dense  traffic  all  make  it  easier  to  maintain 
their  rates  on  faith,  yet  they  have  had  their  periods  of  dis- 
trust and  wrong.  The  dissimilarities  in  our  conditions, 
the  vast  extent  of  our  country,  our  long  railway  distances 
and  extended  systems,  the  greater  differences  in  the  facili- 
ties and  strength  of  American  railways  and  the  strong 
rivalries  of  interior  and  exterior  water-carriers,  etc.,  require 
that  good  faith  be  supplemented  here  by  legislative  sanc- 
tion and  safeguards. 

In  the  case  of  the  Omaha  Board  of  Trade  against  vari- 
ous railways,  Judge  Cooley  said  : 

"  If  a  rate  when  made  by  one  company  as  a  single  rate 
would  in  law  be  unobjectionable,  it  would  be  equally  so 
when  made  by  several  as  a  joint  rate.  The  policy  of  the 
law  and  the  convenience  of  business  favor  the  making  of 
joint  rates,  and  the  more  completely  the  Avhole  railroad 
system  of  the  country  can  be  treated  as  a  unit,  as  if  it  were 
all  under  one  management,  the  greater  will  be  the  benefit 
of  its  service  to  the  public  and  the  less  the  liability  to  un- 
fair exactions.'7 

This  is  all  the  most  perfect  pool  could  do.  The  foreign 
railway  rate  and  pool  policy  accords  with  his  wise  utter- 
ance, and  these  articles  will  conclude  with  that  review. 


ARTICLE    VII. 

FOREIGN    RAILWAY    RATES   AND    POOLING. 

English  public  railway  policy  was  best  stated  by  the 
Royal  Commission  of  1867,  which  inquired  into  the 
charges,  rates  and  tolls  of  British  railways: 

"  We  are  of  the  opinion  that  a  sound  principle  to  act 
on,  in  the  matter  of  working  and  traffic  agreements  be- 
tween railway  companies,  is  to  allow  any  companies ,  .to 
enter  into  them  without  reference  to  any  tribunal,  upon. 
the  sole  condition  that  the  particulars  should  be  made 
public  in  the  locality  and  that  they  should  be  terminable 
By  cither  party  at  the  expiration  of  limited  periods.  If 
any  such  agreement  contained  anything  contrary  to  the 
rights  of  the  public,  the  Court  of  Common  Pleas  should 
have  a  power  of  setting  it  aside  at  the  instance  of  the 
Board  of  Trade." 

"  Railway  Rates,  English  and  Foreign/7  by  J.  Grierson, 
manager  of  the  Great  Western  Railway  (London,  1886), 
said : 

"Agreements  for  the  division  of  traffic,  or  for  '  pool- 
ing/ as  they  are  termed  in  the  United  States  and  Canada, 
are  not  unknown  in  this  country.  Some  have  been  sanc- 
tioned by  Parliament,  others  have  been  made  between  the 
companies  without  any  express  Parliamentary  authority, 
and  have  been  carried  out.  Mr.  Gladstone  made  in  1851 
an  award  apportioning,  for  five  years,  the  receipts  for  traf- 
fic carried  between  London,  York,  Leeds,  Sheffield,  etc., 
between  the  Great  Northern,  and  London  and  North- 
western, and  Midland  railways.  In  1857  he  made  a  fur- 
ther award  determining,  for  fourteen  years,  the  propor- 
tions in  which  the  proceeds  from  passenger  and  goods 
traffic  between  the  same  and  other  places  were  to  In- 


64 

divided   between    those   companies   and   the   Manchester 
Company." 

"The  Working  and  Management  of  an  English  Rail 
way  "  (1891),  by  George  Findlay,  manager  of  the  London 
and  Northwestern  Company,  said: 

"  There  is  another  plan  which  railways  sometimes  adopt 
which  is  known  as  '  Percentage  Division  of  Traffic,'  and 
which  is  carried  out  in  the  following  manner  : 

"  Supposing  that  there  is  a  certain  traffic  to  be  conveyed 
between  two  towns  or  districts,  and  that  there  are  two  or 
more  railway  companies,  each  having  a  route  of  its  own 
by  which  it  is  enabled  to  compete  for  the  traffic.  An 
agreement  is  come  to  and  the  receipts  derived  from  the 
whole  of  the  traffic  carried  by  all  routes  shall  be  thrown 
into  a  common  fund,  and  that  each  company  shall  be  enti- 
tled to  a  certain  percentage  of  the  whole. 

"  The  percentages  are  usually  adjusted  on  the  basis  of 
past  actual  carryings." 

COMPETITION  STILL,  PREVAILS. 

"  The  Railways  and  Traders,"  by  W.  M.  Acworth  (Lon- 
don, 1891),  said: 

"  Companies  have  combined  and  do  combine  every  day, 
but  for  all  that  they  have  competed,  do  compete,  and,  as 
far  as  we  can  see  at  present,  are  likely  to  continue  to  com- 
pete to  the  end  of  the  chapter.  Will  any  Lancashire 
trader  go  into  the  witness-box  and  declare  that  the  Lan- 
cashire and  Yorkshire  and  the  Northwestern  never  make 
any  attempt  to  get  hold  of  each  other's  traffic?  And  yet 
all  the  world  knows  that,  from  a  time  whereof  the  mem- 
ory of  man  runneth  not  to  the  contrary,  these  two  com- 
panies have  agreed  to  divide  the  traffic  at  competitive 
points." 

He  further  said : 

"  The  much  discussed  Continental  Agreement  between 
the  Southeastern  and  the  Chatham  and  Dover,  which  set- 
tles the  proportions  in  which  the  two  companies  are  1<> 
share  the  receipts  for  all  traffic  to  the  Continent  passing 


65 

over  their  lines,  is  solemnly  scheduled  to  an  act  of  Parlia- 
ment and  has  been  judicially  considered  by  every  court 
in  the  country  up  to  and  including  the  House  of  Lords. 
Yet  is  it  not  matter  of  common  knowledge  that  the  South- 
eastern and  the  Chatham  each  fight  their  hardest  to  divert 
the  stream  of  traffic  from  the  rival  line?" 

A  prominent  case  of  Hare  vs.  L.  &  K  W.  Ry.  Co., 
grew  out  of  the  fact  that: 

"  Independent  conterminous  routes  agreed  to  divide  the 
profits  of  the  whole  traffic  in  certain  fixed  proportions  cal- 
culated on  the  experience  of  past  course  of  traffic.  It  was 
held  that  such  an  agreement,  being  bona  fide,  was  not 
ultra  vires" 

Wood,  on  Railroads  (London,  1894),  said  of  this  case: 

"A  shareholder  applied,  though  after  several  years  of 
acquiescence,  for  an  injunction  to  restrain  the  companies 
from  carrying  out  the  agreement.  The  application  was 
refused.  The  Vice-Chancellor  considered  not  only  that 
on  principle  such  an  arrangement  was  legal,  there  being 
nothing  prejudicial  to  either  the  shareholders  or  the  pub- 
lic, but  also  that  he  was  concluded  by  the  judgment  of 
Lord  Cottenham,  of  the  Court  of  the  Queen's  Bench,  in 
the  Shrewsbury  case." 

OTHER  ENGLISH  AUTHORITIES. 

The  same  authority  said  generally : 

"  In  England  it  is  held  that  '  pooling  '  contracts  or  ar- 
rangements between  competing  roads,  by  which  they 
agree  to  divide  their  joint  earnings  upon  certain  classes  of 
business,  or  even  their  entire  earnings,  are  legal  and  valid, 
where  it  does  not  appear  that  the  interests  of  the  share- 
holders or  the  public  are  prejudiced  thereby." 

The  "  Mogul  Steamship  Company,  Lim.,  vs.  McGregor, 
Gow  &  Co.  et  al."  grew  out  of  a  contract  limiting  the 
number  of  ships  to  be  run  in  a  certain  service.  Lord 
Bramwell  said  of  this,  in  1892: 

"  It  does  seem  strange  that  to  enforce  freedom  of 
trade,  of  action,  the  law  should  punish  those  who  make  a 


66 

perfectly  honest  agreement  with  a  belief  that  it  is  fairly 
required  for  their  protection." 

Hon.  Thomas  M.  Cooley,  the  first  chairman  of  the 
Interstate  Commission,  said  January  8,  1887: 

"  Pooling  arrangements  have  been  sustained  in  Great 
Britain.  One  of  the  cases  passed  upon  was  a  pooling 
arrangement  between  stevedores;  another  was  between 
competing  railroads.  Vice-Chancellor  W.  Page  Wood 
said,  among  other  things:  ( It  is  a  mistaken  notion  that  the 
public  is  benefited  by  pitting  two  railroad  companies 
against  each  other  until  one  is  ruined.' ' 

PROF.  HADLEY'S  VIEWS. 

Prof.  Hadley,  of  Yale  College,  testified  in  1885  before 
the  Senate  Select  Committee  on  Interstate  Commerce,  as 
follows : 

"  It  is  a  noticeable  fact  that  at  the  time  when  the  first 
series  of  attempts  was  made  to  check  discrimination  in 
England  the  first  pools  were  arranged.7' 

He  more  comprehensively  testified: 

"  It  may  be  stated  as  a  fact  of  history  that  no  nation 
has  succeeded  in  prohibiting  discrimination  and  pooling 
at  the  same  time.  I  should  be  willing  to  go  further,  and 
say  that,  as  far  as  I  know,  no  law  has  been  permanently 
effective  in  prohibiting  or  discouraging  either  discrimina- 
tion or  pooling,  except  in  so  far  as  it  at  the  same  time  indi- 
rectly or  directly  encouraged  the  other.  On  the  Conti- 
nent of  Europe  the  worst  forms  of  discrimination,  the 
worst  abuses  from  which  we  suffer,  are,  in  general,  effi- 
ciently prohibited,  but  it  is  generally  by  an  organized  sys- 
tem of  pools  of  whose  completeness  we  have  no  concep- 
tion in  this  country,  pools  that  are  not  merely  recognized 
by  law,  but  enforced  by  law.  The  state  itself  enters  into 
such  pooling  contracts  on  account  of  its  own  lines  with 
private  lines." 

Senator  Platt,  of  Connecticut — "  To  what  countries  do 
your  remarks  apply?" 

Mr.  Hadley — "  Chiefly  to  France,  Belgium  and  Aus- 


67 

tria;  also  to  a  less  extent  to  Switzerland  and  Italy.  In 
France1  they  have  never  recognized  railroad  competition 
as  a  principle,  and  scarcely  have  had  it  in  practice  at  any 
time;  but  in  Belgium  and  Germany  they  have  tried  rail- 
road competition,  and,  what  is  all  the  more  striking,  have 
given  it  up  as  producing  discriminations  only  to  be 
avoided  by  pools.  About  the  year  1860  the  railroad  sys- 
tem of  Belgium  was  partly  in  government  hands  and 
partly  in  the  hands  of  special  private  companies.  The 
private  companies  had  longer  lines,  but  the  government 
had  unity  of  management  and  had  had  the  chance  of  first 
laving  out  its  railroads  and  choosing  the  best  routes.  The 
result  was  an  extremely  even  system  of  competition. 
Competition  produced  the  same  effects  it  has  produced  in 
America — good  and  bad.  It  tended  to  the  rapid  devel- 
opment of  the  country.  It  caused  railroad  rates  to  be- 
come lower  in  Belgium  than  they  were  or  had  been  in  any 
other  part  of  Europe,  or  any  other  country  except  the 
United  States.  On  the  other  hand,  it  caused  all  sorts  of 
oppressive  preferences,  special  rates,  special  contracts  with 
private  individuals;  the  government  itself,  in  spite  of  all 
the  central  authority  could  do,  being  a  worse  sinner  than 
any  of  the  private  lines  in  the  matter  of  giving  special 
rates  to  individuals.  The  people  would  not  stand  that  the 
government  road  should  not  make  money,  while  a  private 
road,  apparently  not  quite  so  well  situated,  should  make 
money.  They  tried  to  prohibit  the  competition  of  private 
lines  by  law.  It  was  partly  ended  by  the  absorption  of 
the  competing  lines  and  partly  by  pooling  arrangements. 

"  There  is  one  large  private  company,  the  Belgian 
Grand  Central,  that  has  a  most  inflexible  pooling  contract 
with  the  government. 

"  In  Germany  also  about  the  year  1870  there  was  a  tol- 
erable equality,  in  Prussia  particularly,  between  the  state 
railroads  and  the  competing  private  lines,  and  there  was 
also  a  system  of  discriminations.  Just  in  so  far  as  the 
state  either  consolidated  with  private  railroads  or  entered 
into  pooling  contracts  with  them  the  discriminations  were 
abolished,  but  not  until  then.  They  never  had  discrim- 
ination so  badly  in  Germany  as  we  have  in  America,  or  as 
badly  as  they  had  in  Belgium  even,  but  they  had  some, 
and  it  was  only  abolished  by  consolidation  and  pooling, 


08 

"At  present  the  Prussian  Government  owns  practically 
all  its  railroads,  but  there  was  a  time  when  it  had  large 
pooling  arrangements  with  private  lines. 

"  The  Austrian  Government  and  the  private  railroad 
men  have  come  to  the  conclusion  that  the  only  way  they 
can  possibly  abolish  discrimination  is  by  systems  of  pool- 
ing. The  two  main  cities,  Vienna  and  Budapest,  the 
capitals  of  Austria  and  Hungary,  are  connected  by  two 
railroads  and  the  River  Danube,  one  of  these  railroads 
having  been  built  by  the  state.  As  soon  as  the  second 
railroad  was  made  there  was  this  division  made,  which  in- 
cluded the  state  road  and  second  road  and  the  water  route, 
each  carrying  its  percentage,  although  the  water  route 
was  a  natural  water  course,  *  *  *  and  so  anybody 
who  said  he  would  not  go  into  a  pool  would  be  considered 
to  be  a  very  strange  man,  and  a  man  who  was  making 
trouble. 

"  A  still  stronger  instance,  perhaps,  is  the  Arlberg  Tun- 
nel. Before  they  had  opened  that  road  they  made  a  per- 
centage division  between  that  and  the  existing  roads  by 
dividing  the  traffic  at  each  end  of  the  tunnel.  The  par- 
ties to  this  division  were  the  Austrian  state  railroads,  Aus- 
trian private  railroads,  Bavarian  railroads,  two  or  three 
Swiss  private  companies,  railroads  in  other  South  German 
States  and  several  French  companies  that  formed  remote 
connections.  They  state  themselves  in  all  that  is  written 
on  the  subject,  that  the  only  way  of  avoiding  discrimina- 
tion between  competing  points  is  by  such  percentage  divi- 
sions, with  the  authority  of  the  government." 

POOLS  CANNOT  BE  PREVENTED. 

Prof.  Hadley  said  later  in  his  work  on  "  Railroad 
Transportation"  (1886): 

"With  all  the  police  power  which  the  German  Gov- 
ernment controls,  a  power  a  hundred-fold  greater  than 
anything  we  have  in  this  country,  and  with  all  its  dread 
of  irresponsible  combinations,  it  seems  that  pools  are  not 
a  thing  which  can  be  prevented,  and  that  the  only  way  to 
control  them  is  to  recognize  them  as  legal  and  then  hold 
them  responsible  for  any  evils  which  may  arise  under 
their  management," 


69 


Speaking  of  the  governments  of  Central  Europe,  he 
said : 

"  To  secure  obedience  to  this  (prohibitory)  system  they 
must  take  away  the  temptation  to  violate  it.  This  can 
only  be  done  by  a  system  of  pooling  contracts.  These  are 
accordingly  legalized  and  enforced.  They  are,  carried 
011  to  an  extent  undreamed  of  in  America.  They  have 
both  traffic  pools  and  money  pools.  There  are  pools  be- 
tween state  roads  and  private  roads,  between  railroads  and 
water  routes. " 

The  committee  of  the  German  Empire  reported,  prior 
to  its  purchases  of  its  main  railway  lines: 

"  The  uniting  of  the  property,  of  the  traffic  and  of  the 
management  of  the  inland  main  lines  under  the  strong 
arm  of  the  state,  are  the  only  efficient  and  proper  means 
to  solve  the  task." 

This  clearly  is  a  governmental  "  pool." 

REMEDIAL  LEGISLATION  IMPERATIVE. 

This  long  study,  these  concurrent  conclusions  and  the 
clearly  just  and  beneficial  mercantile  as  well  as  railway 
results,  which  followed  these  policies  in  those  great  coun- 
tries, cannot  be  ignored  by  denunciations  and  arbitrary 
declarations  of  our  dissimilar  conditions,  which  really 
differ  only  because  they  are  more  complicated,  because 
our  rates  average  not  more  than  two-thirds  those  which 
prevail  in  those  nations  under  their  enforceable  contracts, 
and  because,  instead  of  jealous  nations  which  there  as- 
sisted the  solution,  we  presumably  have  harmonious  States 
which  should  aid  us. 

Any  act  or  amendments  which  substitute  theories  for 
these  actual  carrying  and  commercial  experiences 
throughout  the  world,  and  paradoxes  for  principles,  will 
continue  impracticable,  ineffectual  and  hurtful  to  con- 
sistent carriers  and  patrons. 


70 

Senator  Cullom  said  in  the  "  Independent,"  in  October, 
1892: 

"  The  stockholder  in  a  railroad  corporation  owns  his 
stock  as  fully  and  is  entitled  to  as  much  consideration  in 
respect  to  his  rights  as  if  he  were  a  stockholder  in  any 
other  enterprise,  and  the  State  is  bound  to  respect  those 
rights." 

Addressing  a  committee  of  Parliament,  in  1872,  on 
behalf  of  railway  interests,  the  younger  Stephenson  said : 

"What  we  want  is  a  tribunal  competent  to  judge  and 
willing  to  devote  its  attention  to  railway  subjects  only. 
We  do  not  impute  to  Parliament  that  it  is  dishonest,  bnt 
we  impute  that  it  is  incompetent.  Neither  its  practical 
experience,  nor  its  time,  nor  its  system  of  procedure,  is 
adapted  for  railway  legislation.  *  *  *  What  we  ask 
is  knowledge.  Give  us,  we  say,  a  tribunal  competent  to 
form  a  sound  opinion.  Commit  to  that  tribunal,  with 
any  restrictions  you  think  necessary,  the  whole  of  the 
great  questions  appertaining  to  our  system.  Let  it  pro- 
tect private  interests  apart  from  railways ;  delegate  to  it 
the  power  of  enforcing  such  regulations  and  restrictions 
as  may  be  thought  needful  to  secure  the  rights  of  private 
persons  or  of  the  public;  devolve  on  it  the  duty  of  con- 
solidating, if  possible,  the  railway  laws,  and  of  making- 
such  amendments  therein  as  the  public  interests  and  the 
property  now  depending  on  the  system  may  require;  give 
it  full  delegated  power  over  us  in  any  way  you  please;  all 
we  ask  is  that  it  shall  be  a  tribunal  that  is  impartial  and 
that  is  thoroughly  informed;  and  if  impartiality  and  in- 
telligence are  secured  we  do  not  fear  the  result." 

This  is  as  applicable  to-day  and  to  us  as  it  was  then  to 
England. 

May  we  not,  therefore,  soon  say  with  Yon  Ilumboldt 
that  the 

"Chasms  which  divide  facts  from  each  other  are  rait- 
idly  filling  up?" 

GEORGE  R.  BLANCHARD, 


UNIVEBSITY  OF  CALIFORNIA  LIBEAEY 
BERKELEY 


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MAR  87 1918 


APR  11 

*   * 


NOV  ?•? 

ore???  ,j*» 

DEC  4  l924 


FEBl8t926 


9 


15  1932 


1..U     07IUO 


9609; 


D 


